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Foreclosing in Oregon
Foreclosures are up. In fact, the rate at which homes are being foreclosing on in Oregon is now the third highest in the nation. On past shows, real estate experts have talked about foreclosures, depressed market values, and decimated credit scores. But what about short sales? Those are home sales where the bank agrees to take less than the amount owed on the loan. Rick Sadle who negotiates short sales for a living says his business has doubled in the last year. He thinks that may be because more people are willing to explore that option before they go into foreclosure. But he says, short sales are by no means the answer for everyone who's upside-down on their homes.
Most experts are not predicting a big turnaround in the housing market anytime soon — that's despite the lowest interest rates in a half century. Though rates are low, only a small percentage of people can easily qualify for credit.
Have you had trouble getting a loan? Have you sold your home in a short sale? Have you tried? Have you been foreclosed on?
GUESTS:
- Gerry Mildner: Director of the Center for Real Estate at Portland State University
- Terry Gunther: recently sold her home in a short sale
- Rick Sadle: Short sale negotiator with the Sadle Real Estate Team
- Jack Graham: Real estate attorney
- Greg Mirecki: Managing partner of Premier Mortgage Resources
Tagged as: economy · foreclosure · housing · shortsale
Photo credit: respres / Creative Commons
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Re: "Many of those experiencing foreclosures obtained their mortagages in a too liberal, underscrutinized lending climate. "
Really? Wasn't this the entire banking industry for the past century?
To have loved to designed and build my own home for my family and maintain it was not a decision of the banks to cause it to become lost but ultimately, the banks have caused this mess with the help of the government. We as long time homeowners that worked overtime on our jobs for many years feel disrespected now to see comments like these.
As many of us designed and built our own homes and maintained them for over 20 years only to have the banks ruin our homeownership through the bad savings and loans industry of bankers and government greed. The homeowners had nothing to do with this.
- This simple philosophy of real home-ownership that you stated above in so many words is still available to us as Americans if the government would control the run-away banking industry of fast greed, Wall Street spinsters, Day Traders, and others who only see all this as monetary investment.
A persons home is a large part of their life- Not simply a question of monetary investment or does the 'new generation' now degrade to only low rent because that is the way the banks have made it?
Drive through any properly maintained neighborhood of beautiful homes with gardens and artful landscaping as I created in my home- then drive through a low rent district and ask yourself where you would really like to live- Do not mention money controlled by bankers and tremendous job losses created by government and corporate outsourcing when you consider this life.
This banking vs. a meaningful life in a home that you built to stay for life in now becomes a double edged sword that only leads to the question- Your money or your life- Brought to you by your local bankers and governments failed business laws.
Mark Seibold, Elder Retired IT Tech, Artist-Astronomy Educator, Portland Oregon
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Mark, Obviously you put a lot of your work and life into your home. But look at this as an Enterprise: LAND, CAPITAL and LABOR. You invested in the Labor including Design, perhaps Construction and Maintainence.
But you did not have the money for outright purchase of LAND, and the CAPITAL(Building materials, and supplies). And you Borrowed/Mortgaged and were thus able to combine all three. I am sure it is a grand enterprise.
But take away any of the three components: Land---then it is not the same. Take away the borrowed Capital that enabled purchase or the expensive components and building supplies--and it is not the same. You may have saved instead of borrowed, but then you would have to postpone building for decades until you could save the capital. Perhaps, building in smaller sections could have gone piecemeal while you self-financed. But again the time delay and the deferred dream house goal.
But for many Americans, living in a house involves MORTGAGES. And they are a CAPITAL TOOL with both advantages and disadvantages. The alternate is saving for 20-30-40 years and being able to build that dream home when you reach age 70....some societies call that home a Mausoleum.
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Is it better to have loved and lost, than to have never loved?
Many of those experiencing foreclosures obtained their mortagages in a too liberal, underscrutinized lending climate. And because they probably should never have been approved for an unaffordable mortagage in the first place, they are now in jeopardy of losing their home.
Is it better that these homeowners should have never been deluded into the homeownership dream and just been consigned to being lifelong renters? At least the dream was real for a brief moment, but for many the premise was false and the foundation shaky.
Now in a hypervigilant loan market, the opposite is now happening. Many borderline creditworthy will have no chance to get a mortgage short of winning a lottery. Being a renter will be more common for many Americans.
And the dream of home ownership is becoming a fantasy.
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A couple comments not necessarily related: first, initial hints of housing market meltdown was in 2006 - I first started seeing articles here and there re how homeownership should no longer be an "American Dream". Some writers in the financial analytical ranks were really looking hard at this. It turns out if you really crunch numbers you actually LOSE with home ownership. Meaning ALL the numbers. I chose not to buy another home after selling previous one because I was sick and tired of spending most paychecks and all weekends visiting big box home stores and applying what I bought to maintain the home. I appreciate being a renter though renters are disrespected and looked down on by those who seem to feel that ALL renters are trash. 2: because the housing scam and the "victim blaming" that went on when it turned out to be big securities players who were wrecking it for everyone, I tracked various foreclosures, talked with realtors etc. Found out: banks are uniformly bad re: reworking loans; 2) prices incl on foreclosures haven't dropped by much; 3: tax assessors maintain that properties are still valued at a level often double triple or more of what a it (finally) sells for-- but can a new buyer successfully appeal the assessed value? NO! In some cases the property tax bill exceeds the mortgage payments - who wants to deal with that nonsense? 4: there's fallout for the homeowner who manages to rework their mortgage--damage to credit (worse than foreclosure sometimes) and serious fallout for those who get foreclosed because banks CAN and sometimes DO come back on the foreclosed homeowner for the difference between a "short sale" and the amount still owing on the mortgage. A mortgage is a loan, secured by a home, you still owe on the loan even when the security is gone. Worst of all a bank write-down of the loan can earn you IRS problems for "income" you received "on paper" for the dubious benefit of the write-down. A scam for suckers who have not educated themselves before buying into the scam - for scam it truly IS.
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Bankers don't want to adjust loans or foreclose, because they have people on the interest payment hook. That's how they make their money, by usury. And that's the only thing mentioned in the Bible that Jesus ever lost his temper about, the usurers, the money lenders.
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"that's the only thing mentioned in the Bible that Jesus ever lost his temper about, the usurers, the money lenders"
Komrad Tom:
What about the retail sellers setting up shop in the Temple? Jesus up ended their tables, destroyed pottery, scattered the goats, and upset the Starbucks coffee cart sending the merchants scurrying down Broadway and Main. No doubt he was angry that day.
However, he did attack the Zero-Interest , No-Doc, No-Money Down, Variable Sub Prime Loan as an Instrument of the Devil in Matthew4.
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Sears was a pioneer retailer in getting people hooked into paying interest on fairly small purchases. Sears would set people up with Sears credit accounts. And then Sears would have big sales on merchandise to get people to buy on credit and paying interest.
Sears made more money on interest payments than they did selling merchandise. Many many people would end up paying two or more times the initial sales price for their credit purchase. Immediate gratification is very costly in the long run.
Over the years Americans have been lured more and more into buying on credit instead of saving up their hard earned money until they can afford to pay cash for their desired item.
I can remember when we had anti-Usury laws that limited the amount of interest that bankers and businesses could charge. Until Conservative Republicans De-Regulated those laws and subsequently financially raped decent hard working Americans.
And I remember how hard Conservative Republicans worked to prevent Americans from learning about buying on credit, what the dangers were/are, and how to make wise financial decisions. To prevent "full disclosure" of what Americans were really signing up for on that "dotted line".
And now... foreclosures.
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So I don't get this logic.
Sears Department Store is responsible for Oregon's current #3 Highest Foreclosure Rate in America?
Don't they sell Kenmore Washers in North Dakota and Craftsman Tools in Montana--States currently doing well in this economy?
Would imprisoning the Sears CEO and Governing Board promptly resolve this dilemma? And what should become of the Walmart board--firing squad?
Komrade Tom, is this another tirade on the evils of The Corporation? It is growing tedious, paranoid-obscessive and comically pointless. You are becoming a cartoon character.
Credit is a tool. Corporations are a tool. Fire is a tool. So is a hammer. So are firearms. WE NEED TOOLS.
How we USE IT OR MISUSE IT is morality. MEN DO EVIL. Not brainless tools. OR brainless corporations. The Bible Knows this, so does Shakespeare, so does The Constituition.
BTW, Where are the Cheerleading Minions and Shills today?
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Sears was a pioneer retailer in getting people hooked into paying interest on fairly small purchases. Sears would set people up with Sears credit accounts. And then Sears would have big sales on merchandise to get people to buy on credit and paying interest. -- Tom D Ford — Sat July 10th 9:58a.m.
General Motors was the single biggest force behind the advent of consumer credit, especially installment loans for the purchase of cars. Ford, by contrast, made their cars affordable so their factory workers could buy them for less than a year's wages.
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I don't think the point that was being made had anything to do with Sears specifically it was merely illustrative of the usury problem. Of COURSE "corporations are a tool." In every sense of the word including the "slang." Perhaps corporations as an entity are not inherently evil. But what corporations ARE is a mask. A mask which allows the humans shielded by laws which allows those humans to do their worst. A corporation is an entity which does not by law have to obey any sort of laws which arise out of morality as we understand morality is (or should be) in the developed countries. I would submit to you, Jacob, the real facts and laws really DO give the "brainless tool" corporations a real brain. It is a brain which is devoid of any common sense, morality, conscience, empathy. In fact if you look at the corporate entity in that light what you see is your basic human psychopath. It isn't far fetched to conclude these days that this country and indeed most of the western world is being controlled by psychopaths. But, then, I love being a conspiracy theorist. And that lump in my cheek surely cannot be my tongue....
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Sally, This is off Topic, but I did not initiate it.
Let say you have a tool, a hammer. If you were a psychopath you could smash peoples's faces in Stumptown in a running frenzied spree--but I know you are not. Put the hammer on the table, and it has no life or movement. It is your arm using the technology to commit a crime. OR using it to build a house for crippled orphans. Either way the tool is a neutral element.
If I were to use a hammer threaten a bank teller and to rob a bank, it is I that is morally evil. If I make a sham corporation in the Bahamas to defraud the bank and rob it of millions--it is I being the brains, the actor and the evil behind the plan.
A hammer has no brain, and neither do corporations. They are tools or puppets for the real actors, Man. The corporation is brainless. The corporation is a tool I manipulate much like a hammer.
And tools can be used for GOOD and EVIL. Build a house, don't smash people's faces.
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It saddens me to see so many of our neighbors and friends struggling and losing their homes. But I want to inject that there are programs out there that help homebuyers buy a home they can sustainably afford.
I work for Proud Ground and we offer and unique and successful model to make homeownership affordable. Over the past ten years, we've helped more than 130 families buy their first home at a price they can afford.
And not a single one of our families have lost their homes to foreclosures.
Why? Our families receive only fixed-rate traditional mortgages, post-purchase support and sales prices they can afford.
True/Slant recently covered our model in an interview.
Thank you for covering this topic.
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The trouble I had getting a loan is that mortgage companies and banks wanted me to settle for an adjustable rate mortgage. I learned about ARMs and wanted nothing to do with them. They felt like gambling.
I sought to buy a house in the early 1990s and am happy I didn't. I couldn't justify paying twice for a house on a 30-year fixed mortgage. What a rip off.
I had little faith that I'd remain employed long term. The job market for my profession changed negatively in the mid 1990s.
Where others see "investment" I saw "maintenance" and "expenses". Like most things home ownership can be positive under the right conditions, but the conditions haven't been favorable (in my opinion) for decades. Houses are priced too high and cost too much to maintain given my wage.
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I think the "banks sitting on shadow inventory" comment has to do with the idea that banks have been sitting on foreclosures in the hopes that prices would increase at some point in the near future so that they could then put the homes on the market. Banks have also been hesitant to write down the losses - when they sell a foreclosure off their books they have to record that loss. Now the banks need to get those houses off the books and they're realizing that the prices aren't coming back anytime soon.
I recently heard from a realtor that BofA is planning to target Oregon this Fall as one of the markets to clear foreclosures from it's books. If he's right, look for a lot more foreclosures this Fall.
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As far as the economy being better here goes... Well, that seems laughable. We've got a higher than average unemployment rate and job growth is stagnant at best. I'd like to know where job growth in the Portland area will come from in the next few years.
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To help your guest speaker understand the subject about which he's a purported expert, please see these items.
Shadow Inventory
http://www.calculatedriskblog.com/2009/12/report-on-housing-shadow-inventory.html
Current Issue of Oregon Business has a cover story on the state's "resort" and vacation home developments. The consensus of the interviewees, including developers and financiers, is that there is a) over a decade of inventory yet to be sold and b) there will be no more development of such properties in OR - period.
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A homeowner should never give up without a fight. Chances are that any mortgage held by a bank these days has been flipped and bundled beyond recognition. Staying in the house and forcing the lender to produce "the note," i.e. the original mortgage paperwork, could at the very least force the lender to negotiate in good faith.
For more info, visit Findlaw Common Law's Produce the Note page as well as this page from the Consumer Warning Network.
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The problem of MISPRICING will correct itself with time. Nationally home prices have diminished 30 -40% from peaks of 2006. Home sellers tend to have 'sticky prices' holding on to high home prices from a few years ago.
And until they get desperate, home sellers would prefer to sit out the market or allow the house and price to sit unsold for months-- or even years. But holding a home vacant exacts expenses like property tax, utilities, mortgage payments, interest, home repair, lawn maintanance, and neighborhood or coop association fees. These little fees can slowly bleed capital. . The sellers have some reserve hope to hold out for what they think is a short cyclical recession.
It may take 2-3-4 years, but prices will equilibrate by simple market forces. Government programs risk perverting natural forces.
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Please talk about what a modified mortgage is, and if it affects your credit seriously. An appraisal of our house was too low to make refinance helpful, and we are now looking at this option. Gail
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Locally, our foreclosure rate would go down if more distressed sellers would contact experienced short sale realtors to help them through the short sale process. A short sale is difficult and not all sellers qualify but if you hire an agent that knows what they're doing, then you can be successful in a short sale- less risk to your credit score, shorter time before you purchase another home, and hopefully full settlement on the debt.
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From Wall Street Journal - 7 July
http://online.wsj.com/article/SB10001424052748704764404575286882690834088.html?KEYWORDS=pretend+extend
To Fix Sour Property Deals, Lenders 'Extend and Pretend'
By CARRICK MOLLENKAMP And LINGLING WEI
Some banks have a special technique for dealing with business borrowers who can't repay loans coming due: Give them more time, hoping things improve and they can repay later.
Banks call it a wise strategy. Skeptics call it "extend and pretend."
Darryl James for The Wall Street JournalA Portland, Ore., bank has extended the original 2007 loans taken out to purchase this lot. The planned residential community remains undeveloped.
Banks are applying it, in particular, to commercial real-estate lending, where, during the boom, optimistic borrowers got in over their heads to the tune of tens of billions of dollars.
A big push by banks in recent months to modify such loans—by stretching out maturities or allowing below-market interest rates—has slowed a spike in defaults. It also has helped preserve banks' capital, by keeping some dicey loans classified as "performing" and thus minimizing the amount of cash banks must set aside in reserves for future losses.
Restructurings of nonresidential loans stood at $23.9 billion at the end of the first quarter, more than three times the level a year earlier and seven times the level two years earlier. While not all were for commercial real estate, the total makes clear that large numbers of commercial-property borrowers got some leeway.
But the practice is creating uncertainties about the health of both the commercial-property market and some banks. The concern is that rampant modification of souring loans masks the true scope of the commercial property market weakness, as well as the damage ultimately in store for bank balance sheets.
More article at link above.
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I have been trying to do a loan modification on a house that i purchased in 2005 for almost all these yrs ever since and I have not been able to. I have kids and family and Bof A is not cooperating on helping ppl who have hardships and cant make high rate baloon rates on their homes but yet want to stay in the house. Bank sold my second loan in 2008 and sent me a 1099 too but I had to even file Chapter 13 BK to save the house. we are very frustrated and confused now this house affected my family life very much ...thank you.
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I was one of the many to buy my first house in Bend at the age of 27 in 2005. Like so many others, I was afraid that I'd never be able to buy a house if I didn't buy it then. So, I jumped right in with no money down and 30 year fixed mortgage. A year later I bought an investment property and then another year later I bought another investment property. My mortgage broker for my investment properties convinced me that it was okay to lie about my income and take interest only mortgages. A year ago I lost my job and stopped paying all of my mortgages. I was able to short sale the two investment homes and the banks worked with me and were very kind. For my personal home, I had my second mortgage through Bank of America and they were impossible to work with. They strung me along saying that a short sale would be possible. A year later, they said sorry we're taking your house. So I ended up having to foreclose on that house. Bank of America was aweful to work with and I will never, ever give them my business ever again. As far as the real estate and credit business...I want nothing to do with it anymore. I've learned that we depend way too much on money we don't have and having this "ideal American life" of owning a home and everything being okay. Forget it...it just isn't worth it to me anymore. I'll rent and have the landlord fix the furnace and pipes when they break.
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Things may, or may not, balance in the positive. The market doesn’t have some inherent capacity to do good, to make things right. Things might be on the up, but they equally may not be. The market is nothing but garbage in, garbage out. It isn’t going to correct anything just because time passes---it certainly could, but, it certainly, isn’t a certainty, that it will all come up roses. Maybe if we stick around long enough things ‘might’ recover, but that is no more here nor there, then saying culottes will be back in fashion again at sometime in the future. Well, probably!, but, it will take some force, whether natural or unnatural to make that happen. And, if someone is strong enough, or has the exact equation to bring culottes out of retirement tomorrow, perhaps, they could do so. Government intervention could be just as effective as letting the market do its random thing, if the government has the right idea. Just as market recovery won’t be random at all. If it recovers, it will be because somebody made the right decisions at the right time, whether it is the government or a player in the market. But we should never just give up, because, the market 'might' fix things. The market can try, and the government can try---they don’t have to be enemies.
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Good post Scottmil.
And there is no such thing as a "Free Market", because all markets are manipulated, the question is who regulates the manipulators and who benefits from that manipulating and/or regulating.
A seemingly simple looking example is that there is an international "color panel" that decides what will be the colors used next year in merchandising, to include house paints, clothing, furniture, towels, bed sheets, etc. If you like this years colors, stock up because it will be years before the "color panel" decides to bring them back into the market. In other words, next year you will not have a "Free Market" choice to buy the colors that you liked this year. It is a simple example, but it has huge effects on the markets that sell colored items. It is market manipulation, it prevents a "Free Market" in colors internationally.
I remember back in 1966, madras plaids were in, in men's and womens' shirts and shorts, and now they have been brought back into style. I happen to like madras plaids, they're nice happy sunny colors all mixed up together.
I don't have any big objection to that international "color panel", what I object to is the propaganda that there exists a "Free Market" in anything, anywhere, including colors.
So I agree with you that the government and the markets don't have to be enemies. We all just need to be aware that the markets are constantly being manipulated and so also need to be constantly Regulated.
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Our situation matches Mike's, so no need to call in. But it no longer made sense to keep our condo, as an investment asset. Unless the bank were write down the principle by 20%, the value of the property would never match the face cost of the note.
So we're simply letting the foreclosure happen planning to hand them the keys when they finally ask.
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I called my bank last week after the auction failed to sell our forclosed home to ask where I should leave the keys as i am leaving this burden, they had no answer...I hope you get one.
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Seller: I have had this house on the Market for 11 months, and no buyer, few inquiries, and no sales traffic. I don't know what to do? Why is this taking so long? Why is this so Difficult?
Advice: DROP THE PRICE: 10-20-30%.
You will be surprised how fast the sales responds. You don't have to be Einstein to figure this out.
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So Einstein would drop the price to where he receives no equity back? [Hence the term "under water".]
Has said Einstein designed and built his own home, maintained for over 20 years to allow some cheap buyer called the "greedy banks" to take it away by dropping the price to eventually nothing? If this were the simple case, we would not be here today discussing this. We would not be seeing our entire world of collapsed economies.
You might have to be Einstein to figure this out? Have you designed and built your own home yet? Planted all of the entire gardens and maintained it all for over 20 years?
This problem is more complicated than Einstein could figure out if he were alive today- It involves a huge conundrum of banking criminals controlling it all and worse? Those bankers are out of control thanks to our fair government policies.
Einstein should stick to the philosophy of the universe- Our real home. Not the insanity of the banks and the government.
Mark Seibold, Retired IT Tech, Artist-Astronomy Educator, Portland Oregon
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Just like the Laws of the Universe: We Obey the Law of Gravity.
In Buying and Sellling: We Obey the Law of the Marketplace. Mispricing occurs when the market is trying to seek its Equilibiurm. Overpriced Items DO NOT Sell. Underpriced Items sell too well.
We need to find the middle ground where Buyers and Sellers are happy with an agreement and enter contract terms mutually. And there are relative winners and losers. But usually risks and losses are tolerable and gains offset in other assets. I am sorry for your loss, but EVERYONE IS SUFFERING IN THIS ECONOMY. We have to make difficult choices and PRIORITIZE. Losing money in selling House versus a Personal Bankruptcy.
TO Quote Another Great Philosopher, Kenny Rodgers: You Got to Know When to Hold'em, Know When to Fold'em. Know When to Walk Away. Know When to Run.
....IT is better for you to make choices than a Bankruptcy Judge. Good Luck.
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When I bought my first house 30 years ago if you defaulted on your loan they foreclosed on your house, sold it at auction, and came after you for the difference. I can understand bankruptcy, but why are banks allowing borrowers that are able to make the payments walk away from their obligation with no consequences? Allowing people to default just because they are upside down just serves to further deflate home values. What is the lesson for these 30 somethings? Just borrow borrow borrow and if the deal goes bad walk away, completely irresponsible.
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I'm hearing people who are getting $70K forgivness gifts from the banks (and hoping this gift is not taxable), paying off credit card debt with the money they are no longer paying on their loans (while getting free rent for 7 months) ...
What about the other side of the story. For example, we live in Central Oregon as well. Both of us have jobs paying less than $15 per hour with no benefits. We are raising a child. Yet we are making our payments fine.
The result of this deleveraging is interest rates near zero. The scrimper and savers are bearing the burden of all of the financial irresponsibility.
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I agree, I have owned my home in Bend for over 20 years now, was going to sell and retire about now but can’t because the Bend market is so far below all other markets I can’t sell it and buy in somewhere else without loosing a lot of value. The irresponsible City Council, irresponsible builders and irresponsible borrowers have ruined my equity and walked away form the problem with a big handful of cash.
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The original guests opening statements mentioned that homeowners who had homes for 25 years or those who lived in the inner city or [older neighborhoods] were not necessarily vulnerable to foreclosure. This is not true. For my home that I designed and built 22 years ago, which I planned to stay in for life was foreclosed and I was evicted from two years ago even when I attempted to file bankruptcy to save it- bankruptcy court judges laughed me out of the court, dismissed yet it is still on my personal credit record. Even when I returned to work and offered the bank partial payments under their inflated adjustable rate loans that my bank of over 25 years, WAMU advised me to take.
Why should anyone who has designed and built their own home be forced to sell it under a harmless sounding term like “short sale” or face foreclosure, eviction from the bank when we planned on staying in this home for life? Isn’t this situation we have now really controlled by the banks who ruined our mortgage loans? Now they want to force us to sell by using terminology that slights the situation to sounding like a lesser damaging effect yet still taking the owners home away for only the good of the bank getting their money faster- “Short Sale”. It sounds cute doesn’t it, but it creates the same economic downfall- The banks give you a lesser amount and they are happy but the homeowner is now degraded to what? No more home-life? Homeless?
The term “under water” is a vague generalized term that really states nothing with so many aforementioned terms of “Relief Acts”, Forgiveness Acts, untruthful bankers who have manipulated all of this, along with failed government business laws.
Yet we continue to discuss this as if we as homeowners are mental patients or drug addicts that cannot comply with the sick banking industry which is ultimately controlled or lacking control by the government.
Mark Seibold, Elder Retired IT Tech, Artist-Astronomy Educator
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The statement that 25-year homeowners are less vulnerable to foreclosure is accurate as such homeowners would most likely have much more equity. That is, of course, if they did not use their home as a cash register by refinancing over and over to take cash out. Many of those that miss-used their home equity took out that money to buy toys and pay-off credit card debt.
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Comments are now closed.
Hopefull this time, you won't have any NAR shills on the show. If you do, be sure to ask them about David Lereah's (former chief economist for NAR) book "Why the Real Estate Boom Will Not Bust..."
https://www.amazon.com/Real-Estate-Boom-Will-Bust/dp/0385514352/ref=sr_1_fkmr0_1?ie=UTF8&qid=1278696687&sr=8-1-fkmr0
And don't accept the "everybody missed the bubble" line either. Plenty of economists were screaming about the bubble for years before it popped.