Archive for the 'Georgia Articles' Category

Georgian Bank could have survived the housing crisis and could be selling off Atlanta repo homes now if its biggest depositor did not cash out.

Based on statements from several bankers in Georgia, the biggest depositor of Georgian Bank was Reliance Trust, a retirement fund management firm operating out of Sandy Springs. At one point, Reliance had over $200 million deposited in Georgian Bank, representing over 10 percent of the total deposits of the bank.

But when the difficulties of Georgian Bank became front page news, Reliance quickly pulled out its huge deposit block, ultimately crippling Georgian and weakening its ability to recover from its spiking losses in residential and commercial mortgage loans.

Bank regulators said that Georgian Bank was not acting prudently when it maintained big deposit relationships with unreliable partners and firms operating in volatile sectors. They also pointed out that Georgian Bank ultimately failed because it did not comply with regulatory limits on real estate development loans.

Throughout its operations, according to analysts, Georgian Bank devoted 50 percent of its loan portfolio to residential development, which is among the riskiest lending subsectors.

When the mortgage lending and housing sectors were being clobbered by Atlanta repo homes in 2008 and 2009, the Atlanta-based bank was still able to post its peak total assets of $2.2 billion in the middle of 2009. Just a few months later, it collapsed and was the third biggest bank in Georgia when it closed in September.

Georgian Bank was eventually sold to First Citizens Bank and Trust of South Carolina and its depositors were paid by the Federal Deposit Insurance Corporation for a total of $798 million.

On the whole, Georgian Bank failed because it pursued growth even at the cost of violating banking regulations and bypassing commonly-known business precepts. The other Georgian banks that failed were also guilty of taking extremely risky moves.

A total of 37 Georgia banks based have already failed since August 2008, the highest number posted by a state. In 2010, seven banks have already failed, including five banks in March.

In the third quarter, partly because of risky lending decisions by banks, the total number of repossessed homes in Georgia reached 13,607 units, including 5,351 repossessed houses for sale in March.

If the failed banks were more prudent, they could be still standing despite selling off lower-priced Atlanta repo homes, just like the other Georgia banks still surviving.

Search repo homes in Georgia cities:

• Repo homes in Decatur
• Repo homes in Lawrenceville
• Repo homes in Marietta
• Repo homes in Jonesboro
• Repo homes in Mcdonough

A court-administered foreclosed house auction of around 9,500 units across the state of Georgia in November was one of the reasons for the appearance of Georgia advocates before the Domestic Policy Subcommittee of the U.S. House Oversight and Government Reform Committee.

At the congressional field hearing held in Atlanta, a group of professors, activists, builders and banking lobbyists testified before the subcommittee about the failure of the Obama administration’s foreclosure prevention programs in Georgia.

The advocates also cited the difficult conditions of commercial real estate properties in the state and the overall impact of the failure of a lot of Georgia banks on the economy.

Georgia now leads the country in the number of bank failures – 25 failed banks – equivalent to seven percent of all banks in the state. Georgia is also in the top seven in a ranking of states based on foreclosure rates in the July to September quarter.

The pace of foreclosure throughout the state increased by nearly 7 percent compared to the second quarter and increased by more than 25 percent from the same three-month period in 2008.

With one in 119 residential units in foreclosure during the quarter, over 33,000 units were hit with default or foreclosure actions and over 11,000 were already repossessed by banks. According to the advocates who spoke before the congressional subcommittee, around 9,500 homes are to be sold off in a foreclosed house action across Georgia this month.

The advocates complained that the federal Troubled Asset Relief Program failed to allocate funds to save community banks, such as those that collapsed in Georgia, while providing billions in funds to the big banks who were able to return the funds without using them.

Joe Brannen, head of the Georgia Bankers Association, also complained that many of the banks were closed due to aggressive interpretation of accounting rules and banking regulations. He also explained that banks were forced to pressure developers to pay their commercial property loans earlier than scheduled and to deny a lot of construction loan applications because of instructions from federal regulators to cut down their exposure to real estate loans.

Additionally, Frank Alexander, a professor at Emory University, said that many banks had little motivation to modify troubled home loans because they have TARP money to balance their books.

All in all, the advocates expressed their hope that the congressional field hearing will lead to concrete results, including the reduction of commercial and residential properties going into repo house auction proceedings.

Buying government repo homes in Georgia from HUD now is well timed because currently, there are over 4,000 HUD houses throughout Georgia, according to marketing management firm PEMCO Limited.

HUD homes are one-unit to four-unit residential units that have been repossessed by HUD after their owners failed to pay their mortgage loans insured by the Federal Housing Administration.

Every buyer who has cash money or who can qualify for a home loan may buy an HUD home. Every time HUD repossesses FHA-insured homes, it first offers these homes to prospective owner-occupant buyers for a certain number of days. Within this period, owner-occupant buyers need to submit their bids through their HUD-registered real estate agents. If their offers are chosen, they need to close within a specified time.

After the initial offer period for owner-occupant buyers expires and there are still properties available, the HUD homes are then opened for bidding to investors.

Every HUD home is offered on as is basis, so prospective buyers need to inspect first the home before placing a bid. HUD also does not accept contingencies in purchase offers, so buyers need to read the contingency reports on the HUD homes.

Shannon of PEMCO Limited advises prospective buyers of government repo homes from HUD to hire an agent experienced in HUD homes. She explained that real estate agents who have been buying HUD properties will know how to time their bids and how to set their price offers.

To look at HUD homes, visit the online listing sites of property management companies hired by HUD. You can go to portal.hud.gov/portal/page/portal/HUD/topics/hud_homes, which will lead you to management firms and listing agents in your state. Through the sites of these firms, you can see HUD listings available in your state and your neighborhood.

The listings include street addresses, house pictures, prices, areas, number of bedrooms and bathrooms, listing dates, deadlines for bids, property condition reports, escrow amounts and eligible bidders.

The listings also provide links to HUD registered brokers in your area and to information about bid submission. However, only HUD registered agents can submit a bid for you, so look for a registered broker that you can work with and one who has already purchased HUD homes.

According to housing analysts, the number of government foreclosed homes has been increasing in Georgia and in other states partly because of the increasing number of low-down-payment FHA-insured mortgages provided to borrowers who cannot really afford to sustain home loan payments.

More foreclosure homes for sale across Georgia will go into the hands of buyers as more residents are taking advantage of the state tax credit offered by the state of Georgia, which is separate from the $8,000 federal tax credit.

There are lots of valid reasons why it is now the best time to buy a foreclosed house for sale, a new home or an existing home in Alpharetta, Georgia.

Several foreclosed properties for sale around Atlanta will be acquired and fixed by the city using money from the Neighborhood Stabilization Program.

The U.S. Department of Housing and Urban Development’s (HUD) Neighborhood Stabilization Program (NSP) will provide Georgia with $153 million funds to purchase foreclosed homes, repair and then sell or rent them. The amount is part of the U.S. government’s $700 billion financial bailout for the banking industry.