Everett, WA

Investors Buying Troubled Real Estate Loans from Banks

HomeSeeker Center

By: Don Sieb

It is not a game for novices or for anyone lacking courage. But for investors with the right expertise and a serious appetite for risk, the credit crisis is shaping up as a once-in-a-lifetime chance to buy troubled real estate assets on the cheap.

A brisk trade in some of these assets is already under way, with investors buying and selling billions of dollars in distressed bank loans backed by collateral like homes, land and commercial properties. Many of these problem loans trade on eBay-like auction Web sites, which have grown rapidly over the last year.

“All of a sudden, it’s in vogue to want to buy distressed assets,” said Kingsley Greenland, president of DebtX, the industry leader in online loan sales. “Pools of capital are forming all over.”

Most of these loans trade for a fraction of their original value, presenting a tantalizing target for investors. Yet with the economy mired in recession and real estate values still falling in many markets, aggressive bidders risk overpaying even for assets that appear cheap.

Buying loans is a far different proposition from simply buying real estate. The new owner of a delinquent home mortgage, for instance, must essentially take over where the previous lender left off. That means working out a new, more affordable payment plan with the borrower or foreclosing on the property.
“It’s not a quick buck,” said Don Sieb, a real estate investor in Snohomish County, WA “Once you’ve acquired a note, the challenge is to manage it.”

Since the onset of the financial crisis in 2007, the volume of trade in distressed loans has ballooned, according to industry insiders and banking analysts. The F.D.I.C. has been a particularly active seller, auctioning off billions in loans seized from failed banks.

The precise volume is difficult to gauge, however. The market is largely unregulated, and while loans are increasingly being sold online, billions of dollars more in loans are traded in relative secrecy by banks and loan brokers. Most experts believe that, even with the recent increases, banks have sold only a fraction of the troubled loans on their books.

Though experts urge caution, some small investors are beginning to see these distressed loans — particularly delinquent home mortgages — as the next opportunity in real estate.

Two new auction Web sites, LoanMarket.net and www.BigBidder.com, opened earlier this year, selling troubled residential mortgages on a piecemeal basis. Loan sales do have their limitations, though. By disposing of loans outright, sellers forfeit their ability to share in any eventual profits if the values of the loans recover — one reason many banks are resisting what they regard as fire sales.

To capture potential profits from a recovery, the F.D.I.C. has begun selling minority interests of large loan portfolios to private investors, while retaining the majority stake for itself.

Home Seekers Center (HSC) is a one stop resource that provides information about local market conditions and to find properties that are priced well below current market value in the Puget Sound Area. Buyers can expect to save thousands of dollars on distressed property sales.

HSC aggregates all available Distressed Property Sales, New Construction Homes, and Banked Owned Property and Building Lots in one convenient location. We are adding additional properties daily so please check back frequently.

You can't wait any longer if you wish to buy or refinance and take advantage of the low rates. The government intervention into the mortgage backed security market is almost over and that means rates will start to rise. There is no talk about further intervention as we sit here today that's why I am making this declaration.

Next year this time we may be in the mid six percent range so if you can buy now....BUY. If you can refinance now REFINANCE NOW.

Don't get greedy or cute because you will get burned or as they say....pigs get slaughtered.

I wish us all well.

By: Don Sieb
HomeSeeker Center

Everett, WA shows signs of Real Estate Prices Stabilizing. This is good news for both Buyers and Sellers. A total of 976 homes have been on the market for an average of just under 6 months. Generally 6 months of inventory is considered good in a stable market. Inventory is tightening and days on market is falling. Buyers should find ample choices across multiple price ranges. As expected, homes priced in the least expensive and lower-middle quartiles are selling best. This is likely to be a result of First-time buyers and investors re-entering the market. To see what is happening in your neighborhood agents and consumers are welcome to request a Free Market Watch Report for cities within Pierce, King and Snohomish Counties.

Market Statistics City Overview Everett, WA.

The market plateau is seen across home prices in all price ranges. The median single family homes this week in Everett for the following Zip Codes is $279,950.

98201, Median List Price: $244,975
98203, Median List Price: $279,950
98204, Median List Price: $259,950
98205, Median List Price: $258,040
98206: Median List Price: $449,000
98208: Median List Price: $319,250


Everett has approximately:

• 284 Bank Owned Properties For Sale
• 214 Trustee Sales-Auction
• 28 REO Properties

Washington State ranks 17th in the Nation in home foreclosures driven primary by under or unemployment.

Market Statistics Everett, WA Single Family Homes
• Median List Price $279,950
• Average List Price $317,396
• Asking Price per Square Foot $158
• Average Days on Market 185
• Median Size (Sq. Ft.) 1,830
• Total Inventory 976

Key Indicators Price per Square Foot: The average price per Sq. Ft. has remained stable reasonably since July although drop slightly during September.

Market Action Index: Remains a Buyers Market (Below 30 in chart). However, you can see an improvement beginning in June as the index increased from 7.5 to 11.

Days on Market: Inventories have been dropping since May, another sign the market is improving.




ABOUT US

HomeSeekerCenter.com (HSC) is a one stop resource that provides vital information about the Puget Sound Real Estate market. The company provides a stable platform for consumers to search for property that reflects the best values in the housing market today.

Savvy consumers want to know "What's Happening in their Local Market". HSC provides automated real-time market updates by zip code within King, Pierce and Snohomish Counties.

In another impotent attempt to do something (driving blind folded) our government rolled out the 3.9 billion dollar Neighborhood Stabilization Act (NSA) designed to purchase properties going into foreclosure in hopes of stabilizing a real estate market that is declining according to our government.

This is another example of spending money instead of setting the table allowing the consumer to recover on their own. Every single program implemented from the Bush Administration and by our current Administration have failed miserably and has cost all of us billions.

Eighteen months of hearings by Frank & Dodd interviewing CEO's of banks and no meaningful system holding banks accountable forcing them to make meaningful note modifications for those homeowners still employed exists.

The government took away the down payment assistance program. They wish to increase the down payment for FHA loans. They are "thinking' about extending the tax credit for first time home buyers. What on earth is there to think about? ALL COST NEUTRAL. All are tools to help our real estate market turn around. Thinking and a politician mentioned in the same sentence now days is an oxymoron. No leadership on either side of the political spectrum.

Private investors are out bidding the government NSA program so it looks like another in a long line of ‘stupid' will fail and maybe the unintended consequence will be we as tax payers will save most of the 3.9 billion.....probably not....what was I thinking.

Please write your representative.

I wish us all well.

The forecast tonight is more ignorance (just like rain) falling upon us from DC. The long-term forecast - the real estate market will continue to take a beating because congress just doesn't get it.

I'm back and here to rant. The newest self-proclaimed hero coming to the rescue on behalf of the consumer is Representative Garrett of New Jersey. He follows a long line of stupid from the east coast featuring the unflappable Barney Frank (MA) and Mr. Cuomo the Attorney General from New York. The hits keep rolling in with no meaningful results but the banks (all three of them) will continue to take advantage of the consumer - "the biggest loser". The bank lobby has a stranglehold on congress and we, as a nation will pay for that.

Defaults have hit HUD depleting the reserves below 2% (mandated minimum is 2%) so instead of funding or backing HUD (like they did for banks & AIG for example) the genius from New Jersey decided to torture (water board style) Main Street a little more by making it more difficult to purchase a home in an already dead horse economy.

Mr. Garrett's solution? Increase the minimum down payment from 3.5% to 5% for the FHA loan. The ‘thinking' behind this is more down payment means they (the buyer) are less likely to walk away from their home. I don't know what they smoke in Jersey but talking to folks that put 20 or 30 percent down three years ago and have since lost their jobs wish they still had the money in the bank. Down payment is not the problem here!!!

This great thinking piggy backs the elimination of the down payment assistance program and lack of aggressive performance standards holding banks accountable to ensure they really modify loans to a successful conclusion but alas more foreclosures are coming.

Jobs right? The banks continue to say they are undermanned. You could hire 500,000 people to manage the backlog of foreclosures and get houses on the market and sold within a 60-day period. Better yet, get the loans modified to stop foreclosures for those still employed. This would be one component to help stabilize real estate values and help our economy.

I thought "TARP" was to eliminate the toxic assets so why are they (toxic assets) still there and what would motivate any bank to actively hire folks to get loans modified or foreclosures sold in a timely fashion? If there is no pressure to perform plus the cost of money to lend is at zero - do you seriously think banks would pass on the savings or pocket the profits? We already know the answer and the results have been reported.

The bank lobby continues to hold congress on their lap and members sit there quietly sucking their thumbs and occasionally burping up garbage like HR 3706, tedious bizarre disclosure rules and have you seen the new good faith estimate put out by HUD? Yikes!

America - please contact your representative and tell them to close the door on bank, Wall Street and insurance lobbyists then demand they help us here on Main Street.

I wish us all well.