Put yourself in the situation of a bank / lender. You have a piece of property in the City of Buffalo. It was purchased in 1991 for $39,900. You have a mortgage note of $57,378 on it and have foreclosed. The property has a present value of $12,000. If this wasn’t backed by HUD, making the lender whole, would you want to take this in?
The ratio of the property value to the mortgage obtained on the property is not unique to this home. I picked this at random and it was the first property that I selected to run the numbers. The numbers are very typical of inner city properties. This one is a bit unique since the home was purchased more than 15 years ago. You will find many more instances where the property was purchased within the past 5-7 years.
In this case, the note is $57,378. “How did it get that high?”, you might ask. Lenders were all too willing to lend when money was easy. The banks and mortgage companies were marketing heavily and appraisal companies would generally comply with the “value” a property needed to reach in order to justify the loan. How much business do you think a lender would send your way if you appraisals didn’t justify their valuations? If valuations weren’t justified, money wasn’t lent. If money wasn’t lent, fees weren’t earned. Get it?
The New York Times just did a story regarding situations where the banks are giving up on properties. It is a tough market and economy.
http://www.nytimes.com/2009/03/30/us/30walkaway.html?_r=2&pagewanted=1&ref=business
I have been told that we will be seeing a flood of foreclosures since the “stay” is coming up. To be frank, I haven’t done too much homework on this, but my understanding is that there are teams of lawyers working crazy hours to process all of this stuff.
Here is a decent gauge: NY HUD foreclosure list.
Select Erie County from the NY State Foreclosure list. On 3/31/2009 there are 10 properties listed. In the past there were probably about 20-40. Let’s see if this spikes.
Our blurb regarding foreclosures in NY that was published yesterday turned out to be rather popular.
If you are in New York, and looking for a foreclosure, you might want to look to a bank owned property (REO) rather than something from HUD. When buying from a bank, you will have the opportunity to make an offer and negotiate from that. HUD is an offer/acceptance. You won’t receive a counter offer form HUD.
There used to be a lot of bank sites that listed properties for sale. However, the banking industry has changed quite a bit. Collapse and consolidation due to the housing market has altered the sites showing available listings a bit. One of the sites that offers listings of REO properties (more than just 1 bank) is Ocwen financial.
Visit Ocwen Financial. THis is a direct link to the Ocwen NY listing page. You should be able to navigate the site beyond that to find properties in other states.
Good luck with your foreclosure search.
One of the most common questions I am asked when discussing our local real estate market has to do with where you find foreclosure listings. There are a number of places to locate. Certain brokers specialize in foreclosures or REO properties (REO = Real Estate Owned). This refers to property owned by banks.
The first place that you can look for foreclosures is at http://www.nhmsi.com. This site handles the HUD listings in a few states. I would strongly recommend that you be a window shopper if you are not experienced. HUD listings tend to be the worst of the worst on the market and you do not have an opportunity to negotiate with the seller.
If you want to get into the renovation game, step in slowly. Buying the property properly will allow you to do a project properly. As many say, your money is made when you buy the property, not when you repair it. Have firm numbers going in and keep a realistic budget and/or time frame.
