Over the course of the previous decades, America seemed to be living a “champagne bottle” lifestyle on a “light beer” financial budget. While recklessly borrowing capital to offset tax cuts for the wealthy and cover the cost of unfunded wars and bank bailouts, the burden of financial obligation has worsened due to the inevitable economic crisis. This is verified with unemployment figures and foreclosure statistics.
Olivier Blanchard, chief economist at the IMF, said: “Long-term unemployment is alarmingly high: in the US, half of the unemployed have been out of work for more than six months, something we haven’t seen since the Great Depression. “.
“We see the perfect storm brewing with increasing supply and decreasing demand,” said Ivy Zelman, CEO of basic research firm Zelman & Associates.
Experts at Barclays Capital estimate that some four million home loans are in some period of foreclosure.
In California, foreclosures are among the largest in the US California’s current real estate concerns are known as “shadow foreclosures.” This is real estate that has actually been foreclosed on by financial institutions, which could potentially involve households on the verge of foreclosure and disrupt the market in general.
Simply because mortgage lenders generally own the property, shadow foreclosures are not actually a component of the property inventory available for sale to the general public. Banks plan, at some point, to offer these hidden items for sale, hence the term ‘shadow’, suggesting that they are not currently on the market, but you might think that they are likely to become a deluge that hit the market in no time. while it will most likely depress house price levels much more.
A new round of depressed residential home price levels could very well drive more homeowners, who are currently behind on a monthly payment, or even a couple of them, into foreclosure.
For many Californians, the decline in home and bank lending will remain very real. The long-term outlook is just as bleak. Nationally, the most anticipated difficulties are becoming even more ominous on the horizon.
In Arizona, officials say foreclosure laws have tripled recently (2008-9), and legally binding contract disputes are up 77 percent in the past two years.
Foreclosures in Southwest Florida have hurt large numbers of families and decimated entire communities.
“I am seeing the ripple effect that destroys the family structure,” Judge Jackman-Brown said.
The dual distinctive movements that are on the rise in the foreclosure process across the country may extend and intensify this crisis in the coming months and years.
In a trend, significantly more judges are ruling against creditors and removing the mortgage obligation, or invalidating foreclosure sales, on the grounds that mortgage firms fail terribly to produce the correct documentation. In some cases, bankers are judged to have harmed debtors through other tactics.
In the other trend, prime borrowers in “underwater” mortgages, or negative equity, are moving further and further away from their properties.
An attorney with the Jewish Association for Services to the Elderly, Hilary J. Bauer, which represents homeowners defending foreclosure, said; “Until you’re standing in the middle of 40 people who are worried about losing their homes, you can’t appreciate how significant the whole recession was.”
Dennis Nolte, LPL representative at Partners Federal Credit Union in Orlando, Florida. He says. “People need to blow off steam and then focus on what they can realistically do.”
“The government is throwing everything on the market except the kitchen sink,” said Peter Schiff, chairman of Euro pacific Capital. “You can’t prop up housing markets forever.”
“Every dark cloud has a silver lining,” or so they say. What follows is the lining of this dark cloud. It is known as Sale of tax deed.
Earlier this year, Richmond County, Georgia recovered thousands of dollars in back taxes during a tax deed sale for properties whose owners were behind on property taxes from just a few years earlier. Buyers were motivated by low-cost values and looking to produce a top-tier investment.
Ben Bynum, a tax deed investor, said: “I like that you can determine what you pay for a property,” he said. “It’s based on what you think the property is worth.”
In due time, a large number of these foreclosed properties end up in the ‘too hard basket’ and are trapped in a tax deed sale. When you bottom out, the best thing you can do is go to the ‘bottom of the market’.