Repo Homes Blog

Repossession properties for sale are still surging in Tennessee, based on reports from real estate firms.

In January this year, nearly 4,000 households statewide were hit with delinquency and foreclosure notices, with more than 2,000 of them already evicted or given eviction notices. Although the number marked a 17.8-percent drop from foreclosure actions in December 2009, it marked a nearly 7-percent increase from filings in January 2009, according to the Tennessee Housing Development Authority.

In Chattanooga, the county seat of Hamilton County and the fourth-biggest city in Tennessee, more than 7 percent of all mortgaged houses were in default by three months or more and another 1.7 percent of all households were already notified of delinquency or foreclosure.

In Hamilton County, the pace of foreclosure activity has surged more than three times over the past ten years and marked a 15-percent spike in 2009. During last year, almost four houses were being foreclosed upon every day, according to records from the Hamilton County Register of Deeds.

According to nonprofit housing counselors in Tennessee, the number of repossession properties for sale in Chattanooga and in other parts of Tennessee continued to increase compared to 2009 because of job losses and major family problems such as medical costs.

Jeremy Fitzsimmons, foreclosure counselor at the Homeownership Center of the Chattanooga Neighborhood Enterprise, said he and his teammates are trying their best to help homeowners save their homes, but they cannot do anything if the borrowers have no more jobs to depend on.

Ted Fellman, head of the Tennessee Housing Development Agency, said that in 2009, many lenders held back on their foreclosure actions because of several moratorium programs. Now, he said, foreclosure filings will increase as moratoriums are ended. He, however, contended that foreclosures will not spike in 2010, but will be higher in number than total filings in 2009.

According to reports from the National Association of Realtors, the median sales price for homes in Chattanooga has declined by more than 6 percent or by $8,300 since 2008, making a lot of mortgages underwater. With low property values, more homeowners are not eligible for refinancing under the federal foreclosure prevention program.

Nevertheless, the Tennessee Housing Development Authority is still doing what it can to save as homes as it can from becoming repossession properties for sale. It has helped train foreclosure specialists and has helped promote federal and state anti-fraud campaigns.

Repossession houses contributed substantially to the $3.3 billion loss by banks in Georgia in 2009, according to data released recently by the U.S. Federal Deposit Insurance Corporation.

The total loss almost wiped out the estimated $3 billion earned by Georgia banks in 2007. They also earned the same level of profits in 2005 and in 2006.

The problems in the residential and commercial real estate sectors and the impact of the recession made 63 percent of 305 Georgia banks unprofitable in 2009, based on FDIC records. The percentage marked an increase from 49 percent of banks in 2008 and from 15 percent of banks in 2007.

According to Joe Brannen, president of the Georgia Bankers Association, the bank losses are expected because of the huge exposure of Georgia banks to property loans. They made record profits during the real estate boom, inspiring them to become more aggressive in their lending activities. The housing collapse that followed and the record numbers of repossession houses that arose battered Georgia banks and caused the closure of 32 of them in 2009, the highest number among states.

The banks left standing started repairing their loan policies to save themselves. They no longer renewed risky loans and became very strict in approving new loans. Total bank loans in Georgia last year dropped by 11 percent or by $23 billion.

Most of the loan cuts were made on home construction loans and on business and industrial loans. Based on FDIC data, house construction loans fell by 32 percent or by $12 billion while business and industrial loans fell by 20 percent or by $7.5 billion.

Rhajeev Dhawan, economist at the Georgia State University, said that more than two-thirds of banks in Georgia have been complying with regulatory orders to increase their capital and improve their operations.

The level of new loans has sharply declined because banks are making it difficult for loan applicants to borrow and prospective borrowers are not pursuing their plans because of fears about the unemployment situation and the generally weak business conditions.

However, lending in the small business sector shot up year-over-year by 83 percent in the final quarter of 2009. Since 90 percent of the loan amounts are guaranteed by the Small Business Administration, banks are more aggressive in making SBA loans.

The biggest bank loss in Georgia in 2009 was posted by SunTrust, which lost $1.5 billion, followed by Synovus, which lost $907 million. Part of their losses was due to large numbers of repossession houses in their portfolios.

The number of repossession houses is rising in Sacramento due in part to strategies by banks to cut their losses or increase their gains from loans, according to housing advocates and lawyers in the area.

Among the banks being accused of systematically forcing homeowners into foreclosure to increase their profits is Pasadena-based OneWest Bank, which acquired the distressed loan portfolio of IndyMac at a substantial discount of 30 percent when IndyMac collapsed in 2008.

According to more than ten legal actions filed with the Eastern District of U.S. Bankruptcy Court, OneWest Bank can gain more profits if it forecloses on more of the troubled mortgage loans in the books it acquired from IndyMac.

The complainants allege that due to a shared-loss contract with the Federal Deposit Insurance Corporation, OneWest can afford to take the easier route of foreclosure sales or short sales rather than loan modifications and other affordable repayment schemes because the shared-loss contract requires the FDIC to reimburse OneWest at least 80 percent of its losses from the distressed residential loan portfolio. OneWest can also keep all proceeds of the sales of the repossession houses.

In response, the FDIC denounced the claims by the complainants as blatantly false and told reporters that the shared-loss contract with OneWest contained provisions requiring the bank to modify troubled home loans.

Sacramento lawyer Peter Macaluso, who filed eight of the lawsuits, said that OneWest increased the monthly home loan payments of his clients, with some payments increased by over $1,000 after OneWest was informed his clients filed for bankruptcy. Macaluso’s clients in Sacramento were all IndyMac borrowers who sought bankruptcy protection through Chapter 13 bankruptcy filings.

Another lawyer who filed similar complaints against JPMorgan Chase and Bank of America was Elk Grove bankruptcy lawyer Mark Wolff. He said that the banks violated bankruptcy laws.

Elk Grover lawyer Sean Gjerde has also filed a lawsuit in Sacramento against OneWest for refusing to modify the IndyMac mortgage loan of his client.

During the housing boom from 2005 to 2007, IndyMac was the tenth biggest player in the Sacramento market, making $1.4 billion worth of home loans to 5,321 borrowers in Sacramento, El Dorado, Placer, Sutter, Yuba and Yolo counties.

Based on a Treasury Department report, out of 112,000 OneWest home loans in default across the country, the IndyMac acquirer has modified only 3,087 loans by January this year, forcing many of its distressed homes to turn into bargain-priced repossession houses for sale.

Repossessed homes for sale resurged in the counties of Santa Clara and San Mateo in California in January, according to a foreclosure tracking company.

Repo homes for sale soared in number last year in the Hampton Roads area, a metro area that includes the cities of Newport News, Virginia Beach, Norfolk, Portsmouth, Suffolk and Hampton. The area is known for its harbor, shipyards, waterfront properties, beaches and U.S. military facilities.

Foreclosed houses caused huge losses in the home building industry across the country, but ironically in Lee County, Florida, these same houses have been helping home builders survive the downturn.

Buy foreclosure properties in California where there are still thousands of foreclosed units in active listings.

If you are new to foreclosed home auction proceedings, do not get into a bidding war especially against long-time bidders who have long been using inside information and their familiarity with proceedings and personalities in the auction sector to achieve their goals.

A foreclosure home for sale has been a means of recovery from financial difficulty for Bay Area real estate flippers Michael LaOrange and Steven Burris and broker Christopher Stafford.

The continued rise in foreclosure properties has been hurting condo associations throughout Florida, according to Fort Lauderdale-based Becker and Poliakoff, a law firm helping homeowner associations.