Are home foreclosures up in your area?

[Steve]

Are you noticing more home foreclosures in your area? I was reading more about the current state of the real estate market and I learned something interesting. If a home is foreclosed on and sold, you still can be held liable for the difference! Most ruthless foreclosure states - One more wrinkle for home owners to note is that simply because they've lost their properties to foreclosure, it does not always mean they're completely off the hook for their debts. If the auction sale brings less than the amount owed to the lender, it may still go after the borrower for the balance. That's called a "deficiency judgment," and it's a right that lenders do not enjoy in every state. As a practical matter, deficiency judgments rarely occur, but Jacobson knew of at least one case where it was invoked.

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I've noticed a fair number of foreclosure notices posted in the local newspapers over the past year or so. Out of curiosity, I have checked out a couple of the houses to get an idea of the price range and what condition the properties were in. From what I have seen, its the more expensive, $250K and up houses that are being foreclosed. Makes me think that the soon to be former owners were either, A-champagne appetite w/beer wallets, B-victims of downsizing, C-deadbeats, or D-all of the above.

Our states economy is horrible and has been for the last 5 years. We are second only behind Mississippi. My wife and I started home shopping back in March and probably 75% of the homes we looked at were foreclosures.

[Steve]

What's your take on the housing market? Are we at bottom yet or how much longer do we have to go?

Its turning into a buyers market in my neck of the woods. Some good deals to be had and interst rates are not that bad yet.

I just thought of another cause for foreclosures. Variable rates are going up and balloon payments are due. Those have caught up more than few homeowners.

[TexaSstar]

I happen to be in the mortgage business and I can tell you that it will get worse before it gets better. Analysts are calling for the situation to get better in 2009 but 2008 is going to be a bear! Adjustable rate (ARM) Mortgages that were originated in 2006 are going to reset in 2008 and some people will not be able to refinance OR afford the new payment. That is what is happening now, and the mortgage companies that gave these peoplel loans with ZERO down are not offering that type of mortgage anymore. So.... people cannot refinance to a fixed rate mortgage adn they cannot afford the new payments once the ARM adjusts. As a result home values are declining in most of the country so some people owe more than their house is worth. When you didn't put any money down, your credit already sucks and you owe more than the house is worth it is easy for people to walk away. Not pretty right now at all.

[Steve]

Hi TexaSstar,

Thank you for your insight! Did you ever invest in real estate or do you plan on it?