Coastal Disasters = More Foreclosures

Coastal Disasters = More Foreclosures




For anyone who has lived through a natural disaster, the recent tornadoes in Central Florida and the horrific aftermath left behind — approximately 1,500 structures destroyed and 20 people killed — brings back memories of more than just the great need for disaster relief from the federal government (FEMA). It also brings back bad memories of dealing with insurance companies and very slow claims service.

It doesn’t matter if you’re living in Florida or California — coastal property is expensive and so are the insurance premiums that go with them. Back in 1994 something called “The Northridge Earthquake” (misnamed as it was) shook Los Angeles at 4:31 a.m. at a reading of over 7 on the Richter scale. Many insurance companies that WERE writing homeowner’s insurance policies pulled out of California altogether after that one.

Then a few years ago the wildfires in San Diego had the same effect — skittish insurance companies turning and running after paying off on what were expensive policy claims.

According to one recent report, insurance companies are getting skittish again — this time in Central Florida and other parts of the eastern seaboard. This does not bode well for worried homeowners who are sitting on the cusp of foreclosure. Florida had 124,721 foreclosures last year — a 2 percent increase from 2005, and a foreclosure rate of one new filing for every 59 households. The state led the country in foreclosures one month last year, and was in the top three states for total foreclosures every month of 2006, according to RealtyTrac’s U.S. Foreclosure Market Report.

Add to that the fact that many of those homeowners who bought during the past two years financed their home purchase with one of those high-risk adjustable rate mortgages that is due to reset in 2007 or 2008 — and there is something for them to worry about.

In 2002 the Florida Legislature created Citizens Property Insurance Corp. to write policies in what are considered high-risk areas of the state where homeowners couldn’t find coverage on the open market from private insurance companies. Yet some of the victims from last week’s tornadoes were uninsured nonetheless — either because premiums from the private insurance companies were too high and unaffordable, or because their insurance company cancelled the policy outright. Citizens is expecting up to 500 claims to be filed due to last week’s storms, paying out an estimated $5 million to $6 million.

What does this have to do with foreclosures? Everything!

There is an underlying problem here. Most lenders will not fund a loan for a house that is uninsured. So even if distressed homeowners wanted to refinance their way out of foreclosure they couldn’t if they don’t carry insurance on the home. If they wanted to sell the property outright, it’s going to be a problem as well because no one wants to buy a house that can’t be insured. What’s more, lenders consider failure to have homeowner’s insurance securing their loan as a default on the mortgage.

The end result of all this may turn out to be a greater number of foreclosures in the Sunshine State this year, but it is way too early to tell at this point. We’ll just have to sit tight and wait and see.

Understanding Foreclosure - Foreclosure Scams

Bankruptcy foreclosure fraud is a growing problem that threatens the integrity of
the bankruptcy system as it takes advantage of families in distress. The United
States Trustee Program is working hard to identify bankruptcy foreclosure scams
around the country and to take appropriate action through criminal referrals and
civil suits. Be especially alert to the following:

> Equity skimming: In this type of scam, a "buyer" approaches you, offering to
get you out of financial trouble by promising to pay off your mortgage or give you a
sum of money when the property is sold. The "buyer" may suggest that you move
out quickly and deed the property to him or her. The "buyer" then collects rent for a
time, does not make any mortgage payments, and allows the lender to foreclose.
Remember, signing over your deed to someone else does not necessarily relieve
you of your obligation on your loan.

> Phony counseling agencies: Some groups calling themselves "counseling
agencies" may approach you and offer to perform certain services for a fee. These
could well be services you could do for yourself for free, such as negotiating a new
payment plan with your lender, or pursuing a pre-foreclosure sale.

> Probably the most widespread foreclosure scam involves the use of
foreclosure notices to identify individuals facing the loss of their homes. The scam
perpetrator contacts the home owner, advertising "mortgage assistance" or
"foreclosure counseling" and promising to work out the home owner's problems
with the mortgagee or to obtain refinancing for an up-front fee typically ranging
from $250 to $850. The perpetrator may direct the home owner to "fill out some
forms," including a blank bankruptcy petition. The perpetrator subsequently files a
bankruptcy petition in the home owner's name. The bankruptcy petition invokes the
automatic stay, the imminent foreclosure is postponed, and the home owner stops
receiving collection calls and letters.


In most cases, the perpetrator does not tell the home owner about the
bankruptcy petition, instead convincing the home owner that foreclosure activity
has ceased because mortgage problems have been worked out. The perpetrator
may tell the home owner that he or she might receive a notice from the court, which
should be ignored. The home owner may even be told that the perpetrator has gone
to court on the home owner's behalf. No one appears at the Section 341 meeting,
the case is dismissed, the foreclosure goes forward, and the home is lost.
The United States Trustee Program welcomes information that will help detect
bankruptcy foreclosure scams, and is indebted to those trustees, judges,
clerks, secured lenders, bankruptcy attorneys, and private citizens who
report suspicious fact patterns. They coordinate with all participants in
the bankruptcy system to eradicate this destructive form of fraud. You
can find information online about the United States Trustee Program at
http://www.usdoj.gov/ust. For Your Information Foreclosure Scams
For - Understanding Foreclosure -
Sources: Federal Citizen Information Center, HUD, VBA, USDOJ
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Commercial Real Estate Futures

The Chicago Board of Trade, the No. 2 U.S. futures mart, said on Monday it will launch commercial real estate futures on Feb. 21.

The new contract, based on the Dow Jones U.S. Real Estate Index, will allow market participants to bet on changes in the real estate sector of the stock market and manage commercial real estate exposure, the CBOT said.

The futures will reflect the value of the index, which is comprised mainly of real estate investment trusts, securities that track the underlying commercial real estate market.

Contracts will be cash-settled and trade on CBOT's electronic platform. The exchange plans a market maker program to create liquidity in the new product.


CBOT should get its product to market before the Chicago Mercantile Exchange, the largest U.S. futures exchanges, launches a related product.

CME said in September it was teaming with Global Real Analytics to launch commercial real estate futures and options based on a series of GRA indexes — national and regional, and for four separate property types. A launch is still expected in the first quarter.

CME already trades a suite of housing derivatives based on the S&P/Case-Shiller home price indices.

Hotel Foreclosure Sale

Investors pay $2.2 million to buy hotel in foreclosure sale





BILLINGS, Mont. - A group of northwestern Montana investors bought the historic Northern Hotel at auction Friday for more than $2.2 million.

The Boone Trust Group, representing about 10 investors, submitted the only bid for the downtown Billings property, which included the 115-year-old hotel, its land and inventory and a parking garage. The auction was held at the Yellowstone County Courthouse and lasted less than 10 minutes.

Robert and Susan Van Riper bought the hotel, which was rebuilt in 1941 after a fire, in 2002, in part with loans from investors in the Boone Trust Group. After running into financial troubles, the couple filed for Chapter 11 bankruptcy protection last April.

A court-appointed trustee pushed the hotel into a Chapter 7 bankruptcy in September, closing the hotel and setting the stage for Friday's auction.

Billings attorney Joe Womack recently valued the hotel's land, buildings and inventory at $1.5 million. The Boone Trust Group had claims for more than $2 million against the hotel.

The investors will "take a couple of months to decide what to do" with the property, said Dennis Minemyer, a certified public accountant from Missoula who represents the group.

Minemyer said a construction company inspected the building a month ago and found it to be "sound."

CNN Foreclosure Report

The New Rules of Real Estate

http://www.thenoteservice.com


Is it time to cash in? Or to double down before the next boom? The smart money says: Both. Here are the experts' top strategies for today's turbulent market.
By Paul Kaihla, Business 2.0 Magazine senior writer
January 29 2007: 4:46 PM EST

Get your foreclosures here!!!!!!


(Business 2.0 Magazine) -- First, the bad news. In August the median sales price for existing U.S. homes slipped to $225,000, down from its record high, a year earlier, of $229,000. The 1.7 percent dip marked the first year-over-year drop in more than a decade, according to the National Association of Realtors. To many economists, that was irrefutable evidence that the nationwide housing slump is here to stay.

Now for the glass-half-full perspective. First, unlike the destruction wrought by the tech crash of several years ago, the housing downturn won't take a huge bite out of the value of American residential real estate assets, currently estimated at more than $20 trillion.

"Housing cycles end with a whimper, not a bang," says professor Joseph Gyourko, the Wharton School's director of real estate research, whose new study shows investors where to make safe real estate bets during a dangerous market.

Second, down markets in housing have always offered investors just as many angles to play as they might find during a boom - you just have to know where to look.

Thankfully, we've already done a lot of the scouting for you. On the pages that follow, you'll find plenty of ways to play the current market, whether your risk tolerance is low and you're looking for safe ways to preserve your nest egg, or you're an aggressive speculator who sees a downturn as the ideal time to shop.

No doubt you'll read plenty of doom-and-gloom stories about people losing their shirts in real estate during the months to come. Read on to make sure you won't be one of them.

http://money.cnn.com/magazines/business2/business2_archive/2006/11/01/8392036/index.htm?section=money_latest