Gleanings from Foreclosure News

June 17th, 2008

The varied gleanings from foreclosure news make interesting reading.

A new tendency has developed. It is dubbed “buy and bail”. The house owners who have good credit ratings buy a new house and then allow their credit ratings to fall by giving way to foreclosure on the old house. The falling real estate market has created this situation. Michelle Augustine finds another one a mirror image of the one she is residing in at Sacramento, California for half the price. Her present place of residence is blighted with foreclosures and so buys up the second house at less price and surrenders this to its fate – foreclosure.

House owners are shying away from short sales because the lenders are evasive in their answers. A short sale can only take place when the lender agrees to the sale of the house by the borrower for an amount that is less than the due amount. Buyers are eager to snap up a deal. Borrowers find this a good escape route from the stigma of foreclosure houses that would harm credit ratings. But lenders avoid it and try to excuse themselves by saying that they do not have the infrastructure to promptly give a reply. Some short sales become impossible when there are more than double or triple mortgages on a single property.

In Washington foreclosures increased by 17.6% on a yearly count. In May 2008 the foreclosure rate was 1:1,081. This contrasts well with Nevada’s rate of 1:118 and California’s 1:183. But in Kings County the rate was better at 1:1,357. Snohomish County recorded a fall with 1:936.

James York is an investor. He bought the foreclosed house of Representative Laura Richardson but the bank is now rescinding the sale. This has caused him to sue Richardson and her bank, Washington Mutual. Already he has invested in extensive repairs on the unit. York alleges that Richardson used her political clout to cancel the legitimate purchase he had made of this property in Sacramento middle-class neighbourhood for $388,000. Richardson had bought it in January 2007 for $535,000.

In Hawaii the foreclosure weather seems to be improving with numbers having gone down by 22% in May. In April the ranking of Hawaii was 36^th but in May it improved to 42^nd. However the numbers counted to 25% increase from May 2007. In May 2007 there were 129 foreclosures but in May 2008 there were 210 foreclosed houses. The Hawaii foreclosure rate was 1:3,087 in May 2008.