Thread: Well here's a surprise . . .

I wonder if this is a beginning of a new era in which people will pay their payments on time and not fall into deeper debt. Do you think that because of this recession many Americans learned that credit has to be repaid?

IMO, a big factor is current rents vs. mortgages.

If you lose your house you got to go out to rent. If rents are at similar levels than your mortgage then there is not a great reason (in the short term) to stop making the payments to later go and pay a higher rent.

Those that were thinking of strategic defaults have either done it or talked themselves out of it.

FASTLANE NEWS SAID:

" There will be, however, more short-term pain. Nearly half of all delinquent borrowers were at least three months behind on their payments, up from a typical level of under 20 percent."

CAUTION

The 50% will be in the final stages...this quarter.
The banks ran out of money to pay for the foreclosures at the end of the year, but have recouped now to proceed.

FASTLANE NEWS SAID:

"But experts warn that hundreds of thousands of borrowers won't be eligible or won't complete the process. So far, only 116,300 borrowers out of about 1 million who enrolled have had the terms of their mortgages changed permanently."

Almost 900,000 coming/.

I am encourged by the ARM's that will be adjusting this year...as I had 1 of mine drop $250 monthly due to the new rate and assume that the present low rates will help many of these owners as well....their payments should decrease.

I think we need to reread this article.... I like the positive spin - I think the masses need some confidence, but as investors we disect the data.

this entire article was predicated on just one statistic and we all know one data point does not make a trend,

from the article:
>>> the percentage of borrowers who missed just one payment on their home loans fell to 3.6 percent in the October-to-December quarter from 3.8 percent in the third quarter, according to the Mortgage Bankers Association<<<

good news indeed and if this is the start of the trend then the economy's road to prosperity has begun once again, but....


from this same damned article:

>>>However, more than 15 percent of homeowners with a mortgage have missed at least one payment or are in foreclosure, a record. Worse, nearly half of all delinquent borrowers were at least three months behind on their payments, up from a typical level of less than 20 percent.<<<

half of the delinquencies are more than 3 months behind?
and 15% of American mortgages missed at least one payment (and worse)?

and don't forget, we just came off a record year of foreclosures and all of those properties have been removed from this equation.

mind numbing numbers, especially if you evaluate the impact on the lending infrastructure.

look, I want to see the housing market pop up and I'm ready to jump back in with fists full of cash, but until banks are safe again, the lending process to JoeSixPack is still at a virtual standstill until the problem and for investors like me who has two to sell and one to buy I am still wary of the lending markets ability to make the loans.

just spoke at length with friend yesterday, vp for top world bank and as far as lending goes, we are in a doldrums for quite a while.

key to success in foreclosure market is to capitalize on the short sale market, but really SHORT it... and to use cash or private equity funds.

My plan...........exactly! It's EZ to buy, but getting the new buyer financed is the problem !

Originally Posted by Cat Man Du

My plan...........exactly! It's EZ to buy, but getting the new buyer financed is the problem !

It is only a problem if you cannot find the solution.

Originally Posted by wildambitions

It is only a problem if you cannot find the solution.

Ahhhhhhhhhhhh. Your suggestions ................. please!

For me it means I'll be able to build higher priced homes and sell more of them, so I will make a lot more money.

I'm looking forward to a normal market in a couple of years.

Originally Posted by hatterasguy

For me it means I'll be able to build higher priced homes and sell more of them, so I will make a lot more money.

I'm looking forward to a normal market in a couple of years.

are you building the actual houses now in preparation for an upswing in the market in couple of years?

a lot of talk has been circulating about lease to own or rent to own, but laws in NJ have been extremely tenant/buyer friendly in cases of default.... are there other options out there?

Originally Posted by Russ H

Good news.

This wasn't predicted by the experts.

Wonder what it signals?

Report: Fewer people falling behind on home loans - Yahoo! News

-Russ H.

as you can see from this chart, there have been slight decreases in the past only to increase again. We need a solid few consecutive monthly decreases to consider this a "turn around" point....

MortgageDelinquencybyPeriod.jpg (image)

One thing I would be curious to know is (historically speaking) what percentage of people actually save themselves from foreclosure once they hit the 90 day delinquent stage. I would bet that it is very low. Low enough to say that once someone hits the 90 day mark, you can just assume it is over and the property will go into foreclosure.

Originally Posted by camski

One thing I would be curious to know is (historically speaking) what percentage of people actually save themselves from foreclosure once they hit the 90 day delinquent stage. I would bet that it is very low. Low enough to say that once someone hits the 90 day mark, you can just assume it is over and the property will go into foreclosure.

exactly! I read that it used to be about 40% of the homeowners saved themselves from foreclosure at the 90 day delinquency point. (many of the people were able to get jobs after losing them, which caused the delinquency)

I read that rate is below 5%... this is very low for many reasons including the employment scenario I just described but also there are a lot of people simply walking away from their underwater obligations.

Originally Posted by hatterasguy

For me it means I'll be able to build higher priced homes and sell more of them, so I will make a lot more money.

I'm looking forward to a normal market in a couple of years.

I'm not much into real estate, but please do tell how you are going to make money with the glut of empty homes waiting to be sold. people don't care much for bigger houses like they do or higher priced homes. what will make your HIGHER priced homes sell more? are they gonna be green homes? energy efficient design?

Originally Posted by randallg99

as you can see from this chart, there have been slight decreases in the past only to increase again. We need a solid few consecutive monthly decreases to consider this a "turn around" point....

MortgageDelinquencybyPeriod.jpg (image)

REP SPEED For this. +++

Thanks,

-Russ H.

Originally Posted by randallg99

exactly! I read that it used to be about 40% of the homeowners saved themselves from foreclosure at the 90 day delinquency point. (many of the people were able to get jobs after losing them, which caused the delinquency)

I read that rate is below 5%... this is very low for many reasons including the employment scenario I just described but also there are a lot of people simply walking away from their underwater obligations.

YES! I read the same thing. The real devastation is yet to come, I'm afraid!

Originally Posted by randallg99

are you building the actual houses now in preparation for an upswing in the market in couple of years?

a lot of talk has been circulating about lease to own or rent to own, but laws in NJ have been extremely tenant/buyer friendly in cases of default.... are there other options out there?

No I'm building and selling them now. But its a PITA, the banks don't want to lend and I'm stuck building $350k raised ranch's. I'm also limited on what I can pay for land which makes finding deals fun to say the least.

When the market comes back I'm looking forward to moving into $400k-$700k colonials and $1m beach houses. You can make more money building nicer stuff.

Lots of buyers around though, can't complain about that. I had a three way bidding war going on the little colonial I just sold. I got $5k over asking for it and had to stop the buyers because it simply isn't going to appraise for more.

My area is quite low on certian types of inventory, I simply build to meet that niche.

Personaly I would never do a lease or rent to own and have turned down several such offers. I want my money out of the deal, I don't want to sit on it for a long time. Than if the person defualts your stuck with a devalued used house you need to clean up and dump. Since I build with cash my carrying costs are just silly low, for example the above colonial is costing me $130 a month to hold between gas and electricity, so I don't mind sitting on them. The market would have to get a lot worse than it is now for me to consider such an offer.