According to Lender Processing Services (NYSE: LPS), there are now more than 6 million delinquent mortgages in the U.S. A delinquent loan is any loan that is at least 30 days past due, which of course includes those currently in foreclosure. LPS is a loan servicing conglomerate that maintains a database of roughly 40 million mortgage loans at a given time, which gives them considerable perspective in terms of national trends and statistics. According to their calculation, the mortgage delinquency rate (MDR) is nearly 8 percent, which does not include mortgages that are in the foreclosure process. Therefore, the national foreclosure inventory is now estimated to be nearly 2.1 million. The actual mortgage delinquencies then total 4 million. Of those delinquencies, a staggering 44.3% are more than 90 days delinquent.
destin florida foreclosure
Florida Lottery Sales Surge
Not all sales numbers are gloomy in the Sunshine State … According to state officials last week, The Florida Lottery is expecting a record year in sales, to the tune of $4.26 billion! After many years of consistent growth, Florida Lottery sales declined as the economy faltered in 2009.
So what is behind the surge in ticket sales? Some say it is a sign that the economy is recovering. Others contend that consumers are simply feeling more desperate. One thing is certain … With retailer-giant Wal-Mart jumping on the Florida Lottery bandwagon, Lottery officials must be giddy.
You would be hard-pressed to find a convenience store in Florida that does not sell Lottery tickets today. Supermarket chains in Destin, Ft. Walton Beach and South Walton like Winn-Dixie and Publix have long been on board, and most independents have jumped into the fray as well. The sale of a winning ticket can mean huge rewards for the vendors. In fiscal year 2008-09 Florida retailers earning a staggering $220 million in Lottery sales commissions.
The Lottery is not likely to go away any time soon. With states around the nation scrambling for dollars, shortfalls abound. Florida Lottery officials claim that the Lottery generates a whopping $1 billion per year toward education and college scholarships. That equates to 5% of Florida’s $20 billion annual education budget.
PMI Group, Inc. Files Chapter 11
According to PMI, their Chapter 11 bankruptcy filing is in response to the seizure of two of its subsidiaries by their primary regulator in Arizona last month. The subsidiaries include PMI Mortgage Insurance Co. and PMI Insurance Co., who make up a significant share of the private mortgage insurance market in the U.S.
According to PMI, they now wish to “raise additional capital from new investors in order to allow a third subsidiary, PMI Mortgage Assurance Company, to serve as a platform to write new mortgage insurance nationwide”.
The Arizona Department of Insurance said that PMI will be making claim payments “at 50 percent”. Presumably, that means that the unpaid balance of the claim will become part of the bankruptcy creditor claims. It is interesting that none of PMI’s subsidiaries themselves filed bankruptcy, only the parent company. While PMI states that they will continue to operate in the ordinary course of business, as a debtor-in-possession, their operations will be under the scrutiny of a Federal Bankruptcy Court.
Sitting on approximately $735 million in unsecured notes that are now due and payable, it is yet unclear as to how PMI’s move will impact the many lenders around the nation who are presently seeking claims reimbursements. Also in question is how this may impact the many tens of thousands of short sales that PMI has insured. If bankruptcy court approval will now be required for claims authorization, the short sale process nationwide and along the Emerald Coast as well could be dealt yet another unwanted setback. Time will tell.
As The Market Turns
Many in the know do believe that major lenders are gearing up to accelerate the foreclosure process next year. Consequently, many of them are also gearing up to approve higher numbers of short sale transactions. As an example, Bank of America will complete approximately 100,000 short sales nationally in 2011, but has plans to complete 160,000 short sales in 2012.
What makes the better deal today, a foreclosure or a short sale?
Although either can make an excellent investment, both have pros and cons. The foreclosure inventory has been somewhat depleted this year, making these properties more difficult to obtain. Short sales are much more plentiful, but can take an extensive period of time to complete.
The foreclosure inventory is low mostly the result of the robo-signing debacle of 2010. Many of the nation’s lenders chose to curtail their foreclosure activities while reviewing their processes and procedures. There is a great deal of “shadow” out there, and it is just a matter of time before these properties start hitting the market. Some lenders are even considering interim options such as long term rental agreements to deal with the issue of abandoned properties.
The best advice is to develop a relationship with a Realtor that specializes in such properties because the best deals do not last long. Investors represent more than 50% of the buyers in certain market segments and are rapidly scooping up the best deals.
For information on Destin, Ft. Walton Beach, Seaside and Emerald Coast short sales, bank foreclosures and general real estate topics, please visit www.FloridaBrokers.com , www.DestinFloridaRealEstate.com or email us at smith@realtor.com
We are buying a short sale in Destin. Why are we required to agree to not re-sell it for 90 days after we close?
If I buy a house at the county foreclosure auction are all the other liens wiped out?
It depends. We have seen quite a number of bad deals resulting from these types of purchases over the years. The county does not warrant the title and certain liens may survive the foreclosure. We have seen cases in which individuals have purchased properties that were foreclosed by the second mortgage holder. They erroneously believed that they then owned the property outright, even though a superior lien existed.
You should always consult with an attorney in advance of the foreclosure sale date to help ensure that there are no surprises. Otherwise you could end up being saddled with unexpected liability.
Where are all the foreclosures?
A couple of factors are contributing to the lower inventory levels. First, the market activity in single family homes is up 20% Y-T-D over last year in Okaloosa County. Secondly, foreclosure (lis pendens) filings are way down. Through March, there have been 192 foreclosure filings this year as compared with 573 for the same period in 2010.
For information on short sales, bank foreclosures and general real estate topics, please visit www.FloridaBrokers.com
or email us at smith@realtor.comWhat is the “due on sale clause” in my mortgage?”
The due on sale clause in today’s mortgages basically states that if you sell or transfer all or any part of your interest in the property without your lender’s prior written consent, the lender (at lender’s option) may declare you in default and require immediate payment in full of your entire mortgage balance. Even a lease option is considered transfer of interest and would trigger the due on sale or acceleration clause.
Can I do a deed in lieu of foreclosure instead of a short sale? How does that work?
A deed-in-lieu is sometimes considered by a lender instead of a foreclosure if the lender believes that doing so would result in less financial loss to them. Such may be the case if the property’s value and mortgage balance are similar. Properties with second mortgages and/or large unpaid assessments and/or judgments are not typically good candidates.