Chicago Relocation
 

Why are cash buyers increasing…?

June 9, 2014

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chicago foreclosure
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John D’Ambrogio

…When rates are still at historic lows and institutional investing seems to be fading?

Well, info recently released for RealtyTrac, which crunches housing data, the percentage of ‘all cash’ buyers hit a new high this year.

It used to be assumed this would be the result of serial or institutional investors – those who buy double digit numbers of properties each year with the goal of holding and renting.

However, as prices have jumped (then inched) upwards, institutional buyers have been backing off.  They are all about the numbers and if the numbers don’t make sense for them and their investors they simply move on.  I have certainly seen this firsthand in the foreclosure and low end market.  Last year’s deals are long gone.

RealtyTrac’s position is that it’s everyday consumers who were able to stock away cash (or perhaps are purchasing in instruments such as IRAs) and small investment groups (with perhaps more modest return goals).

Regardless, cash is still King.  It never really wasn’t, was it?

 
 
 
 

Why have REOs Decreased?

March 24, 2014

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chicago foreclosure
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John D’Ambrogio

pulls apart the statistics to show you why there has been a decrease in foreclosure sales.

 

 
 
 

Should Uncle Sam Do More?

September 25, 2012

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John D’Ambrogio

Our friends at Yahoo! recently release a study entitled “Home Horizons 20120″ in which they asked Americans their thoughts on government and the housing market.  The interviews were conducted with 1500 “current or aspiring homeowners” which is kind of a clever way to say 1500 adults.  Even if it’s not the so-called American Dream I’m sure no one would turn down a (non-upside down) home.  But I digress.  And earlier than usual….

Actually, I’m surprised that only half (51%) wanted more government intervention to rescue at-risk homeowners.  27%  disagreed and 22% weren’t too interested one way or another.  The main request, from those interested, were more government low cost loans.

Not surprisingly, the republicans got taken to task more than the democrats in terms of who respondents thought would have a more negative effect on the real estate market (39% and 32% respectively).  Not surprising given the image of who supports limited government v. “big” government.

The more I read Yahoo’s article the more confused I get – I quote “The study also finds that four out of five adults believe that the 2012 presidential election will have either a small or large influence on the housing market.”  Did the other 300 respondents say “medium?”

The article also states that NAR is in favor of government intervention, according to an unidentified spokesperson.

As our readers know, the government has already put two major initiatives into place – HARP and HAFA (respectively, the Home Affordable Refinance Program and Home Affordable Foreclosure Avoidance Programs).  The Federal Finance Housing Agency reports it has “completed nearly 2 million foreclosure prevention actions” and “nearly 1.7 million … have allowed borrowers to retain homeownership.”  With 4 million foreclosure sales in recent years, and estimates of another 8 million at risk – that is not bad, but it certainly doesn’t mitigate the problem (or the causes!).

In summary, they don’t seem to see 2012 as a turnaround year.  I, however, tend to be a bit jaded by these surveys.  If you asked a hungry person if they were hungry, they’d probably say they were hungry…

 
 
 

Where do you stand on strategic defaults?

July 25, 2012

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John D’Ambrogio

It seems one of the buzz-phrases I heard a lot in 2011 and will surely hear in 2012 is “Strategic Defaults (SD).”  By now you’ve surely heard of a strategic default – In essence, where a homeowner who can afford their mortgage chooses instead to stop paying on it, and is willing to “take the hit” on their credit as opposed to paying on what they consider an investment gone bad.

A quick google search of the phrase brings page one results (which I will not promote by linking to) including web pages promising help for homeowners who are consider a strategic default, including such pithy headers as “strategic default v. moral obligation” and “quit feeling bad for the banks.”  Or there’s “How to strategically default and make life miserable for the banks.”  Wow.  Sounds like the seeds of an “Occupy (insert mortgage company name)” offshoot. The “Joanie loves Chachi” spinoff from “Happy Days.”  I hope they bring drums.  I love drums.

My professional colleague Steve Harney has a number of great posts on this topic at his blog – kcmblog.com (Keeping Current Matters), including “Will Falling Values Lead to More Strategic Defaults” which provides some pretty startling stats from FannieMae, including the fact that  ”The number of underwater homeowners who believe it is okay to default on your mortgage if you are under financial distress has almost doubled in the last twelve months (14% to 27%).”  So not only do we have more people under water (the audience for a SD) but twice as many think it’s OK!

And in his article “One Thing That Still Concerns Us” Steve discusses a related factor – Consumer Confidence – That has the ability to further push SDs “mainstream” while causing further delays in the housing market.

Personally, I understand the professional logic of “cutting bait” when an investment has gone bad.  But to stop owning (i.e. selling) your losing shares of ABC widget company because they have less value than when you bought them is not the same.  Why?  Because you didn’t borrow the money (hopefully) from ABC to purchase their stock, which is what you do with a mortgage.

Shame on the banking system for going along with the over confidence of the real estate bubble, and turning a blind eye when they should have been a bit more parochial us? Sure.  Government intervention to force the re-working of loan terms?  Well, that’s a point one can argue.

Let people walk away from debt that they signed their name on?  I can’t agree with that.  What do you think?  Maybe we’re all in it together, because when one person defaults, we all pay.  Reminds me of a poem.  Ask not for whom that bell tolls…

It tolls for thee....

 

 

 
 
 

Update and Overview on Distressed Properties

March 29, 2012

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John D’Ambrogio

What’s going on in the world of distressed properties in the Chicago Market?  John D’Ambrogio , CRP,  discusses what occurred in 2011 and how it affects us in 2012.

Distressed Properties and Their Effect on the Market from Baird Warner on Vimeo.

 

 
 
 

Financial Institutions and the Mortgage Crisis.

January 22, 2011

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A viewpoint from Seun Olatoye-Ojo:

The recent admission by several financial institutions that errors were made with mortgages – hence foreclosure of homes – has been quite disturbing. It’s good enough that these companies have admitted to the wrongdoing but did they really have a choice or were they caught red-handed? Recently, Sheila Bair of the FDIC made a case for a fair compensation of customers who lost their homes as well as those who have been overpaying for years due to these errors. A few questions have agitated my mind. First, is an act a mistake when you are caught or when you discover it on your own? Also, when is compensation deemed adequate? These are two questions that are certainly open for debate; you decide.

A moment ago, JP Morgan Chase & Co admitted it had overcharged over 4000 members of the US Military and foreclosed a few homes in the process. This happened only after a lawsuit had been pursued by one of the affected service members. The bank has apologized but how do you quantify several months of trauma of foreclosure and collections in monetary terms? Is it just enough to return homes and overpayments and assume it is all square? I find myself providing more questions than answers to my previous questions but many foreclosure victims ask these questions too.

From a different perspective, the industry wide ripple effect of these actions cannot be ignored. Put more succinctly, it’s contagious. On the one hand, new home buyers are very hesitant to buy due to the news making rounds as per foreclosures and bank errors; on the other hand, high unemployment rate has further compounded an already complex problem. Conversely, there has been some improvement in these two critical areas even though they have not been as significant as we all hope for. We used to think irrational exuberance drove the stock market but these days “rational exuberance” is sort of driving the housing market. The least that the banks can do is restore some kind of confidence in the mortgage industry by cutting down – or even totally eradicating – mistakes. This can add some momentum to a kick-started industry currently experiencing the lowest growth rate in decades.

 
 
 

Agreement made for next steps in foreclosure paperwork issues

October 19, 2010

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It looks like Chicago foreclosures will begin to flow again after their abrupt halt a few weeks back.  DSNews reported today that both B of A and Fidelity Nat’l Financial have come to an agreement on the foreclosure paperwork issues that have caused havoc among some of the nation’s largest lenders in the last few weeks.

Fidelity will continue to provide title insurance for B of A’s foreclosed homes and B of A agrees to cover any court and settlement costs.  Fidelity agrees to defend any NEW buyers in any court proceedings.

While it doesn’t quite mean “business as usual” it means that the parties (and the government) are interested in moving forward with selling these parties, which is undeniably critical to moving out of the nation’s real estate recession.

The article quotes ALTA (American Land Title Association) CEO Kurt Pfotenhauer as saying “ALTAsupports FHFA’s outline for an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, markets and other stakeholders,” said Kurt Pfotenhauer, CEO of ALTA.

 
 
 

Is “robo-signing” stalling the Chicagoland Foreclosure Market?

October 7, 2010

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If you are dealing with, or interested in, foreclosure property anywhere in Chicago or beyond, please read this article posted in this week’s Chicago Tribune by Mary Ellen Podmolik.  In the article, Podmolik describes the stopping of foreclosure processing in 23 states in an effort to review their systems! One of the major challenges is the bulk processing of documents, called “robo-signing.”

JP Morgan Chase is suspending more than 50,000 foreclosure cases.  Affected borrowers are urged to call the state’s consumer hotline at 866.544.7151. 

This stall could not only affect foreclosures that are “in process,” but slow the process of new filings, as an entire system is examined and overhauled.

 

 
 
 

B&W’s Karen Larsen awarded by Freddie Mac

July 18, 2010

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From our dear intern – Maija Harjula – A few weeks ago Baird & Warner’s REO Manager Karen Larsen was awarded in a Freddie Mac’s Illinois Annual Regional Meeting. She received the Mentor of the Year award for her work with Pamela Martin of Realty Services Consortium. When Karen was named as Pamela’s mentor last May Pamela was just starting as a HomeSteps network broker.

I had a chance to ask Pamela what made Karen’s mentoring so great. “In addition to being a wealth of knowledge, she is patient and willing to share every little thing. We talk openly and I have no hesitation in bringing up any problematic matters” Pamela told of Karen.

I had no doubt the award went to the right person – especially when Pamela referred to Karen as “… my mentor, my go-to person, my friend forever”.

Chicago Relocation Blog salutes Karen for her great work!

 

 

 
 
 

Per The Chicago Trib – Chicago home sales hot, prices not!!!

March 23, 2010

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Mary Ellen Podmolik wrote a great article in the Business Section of Today’s Chicago Tribune (read it here) discussing how distressed properties are helping to redefine our market.

I’ve spoken on the subject often (as well as in this article) and it is amazing in the last two years how much of an influence the REO and short sale world has had on Chicago Real Estate.  As quoted in her article, the median price in our dear Chicago has gone down 1/5 – to $176K from $225K.  Truly a market correction. 

As a transferee to Chicagoland, the time has never been better.