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Market Condition

Florida Bankruptcy, Foreclosure, Short Sales

This is the best explanation of the foreclosure process that I have found.  Follow the link below to read the entire article.

Mortgages, Foreclosures, and Short Sales

Anatomy of a Mortgage

A mortgage is a loan backed by real estate.

When you borrow money to buy a home, you sign an I.O.U. (also called a “promissory note”) and agree to repay the loan in steady monthly installment payments. To protect the lender (the bank) you are required to “give the bank a mortgage” on the property. The mortgage is a document that connects the promissory note to your home. The mortgage says to the bank “If I don’t pay you back on time you can have my home auctioned off and use the proceeds to help repay the loan.” A loan backed up by a mortgage is called a mortgage loan. Sometimes it is called a “home equity loan” or a “home equity line of credit.” Any loan that is backed by the creditor’s right to auction off a piece of land is a mortgage, no matter what they call it.


First mortgage and second mortgages.

 

What is the difference between a first mortgage and a second mortgage? It’s like an ice cream parlor. On a busy day, you go in and take a number. If you are first, your number says #1. A line forms behind you as others pull numbers 2, 3 and 4. When the person behind the counter is ready, you hear “Now serving number one” and you step forward. You have certain rights that that point. You are entitled to first pick of everything. If you have enough money, you could presumably buy all the ice cream in the store. So, you have the right to be completely satisfied before anyone behind you gets anything. OK, let’s say you buy some ice cream and leave. Now the customer holding #2 steps up (he is now #1, in a sense) and he has the same kinds of rights you had. Mortgages are like that. The first mortgage has a right to auction off your home if you don’t pay and will receive all the money necessary to pay back his loan before the second mortgage gets any money at all. Mortgages get their “number” in the order they are “recorded.” More about this later.

Florida Bankruptcy, Foreclosure, Short Sales.

Appraiser as an Expert Witness

The 1993 U.S. Supreme Court case Daubert v. Merrill Dow Pharmaceuticals created a new rule regarding the admissibility of expert testimony in all types of court cases by establishing new criteria and designating the judge as “gatekeeper” to evaluate the scientific methodology. The judge acts as a gatekeeper by considering a list of four factors which aid in determining the reliability of the testimony. The four factors are the following: whether the theory can be and has been tested, whether the theory has been subjected to peer review and publications, whether there is a known rate of error the court should consider, and whether the technique is generally accepted in the relevant scientific community.

Some courts have interpreted Daubert to apply to all expert testimony regardless of whether or not it is scientific in nature, while others have ruled that Daubert did not apply to expert testimony that just involves specialized knowledge. In 1999, the U.S. Supreme Court ruled in Kumho Tire Co. v. Carmichael that all expert testimony, whether scientific knowledge or specialized knowledge, be judged according to the same strict standards outlined in the Daubert ruling.

It is expected that the fourth factor of the Daubert criteria will be increasingly emphasized. The judge may look at how well the expert appraiser uses the generally accepted methods of appraisal practice. The judge may also look more closely at the number of years of service as well as generally recognized appraisal designations acquired after meeting minimal experience requirements. It will be important for the appraisal expert for either side to be prepared for a reliability attack. Appraisers need to be able to explain both their qualifications as an expert and the reasons for their opinions. They need to be capable of thoroughly explaining in their appraisal reports how they arrived at their conclusions. Appraisers need to be consistently applying the standardized criteria of the appraisal profession and should go back and review the generally accepted appraisal principles. They also should be acquainted with new knowledge and be aware of changes in the generally accepted appraisal principles.

Now is the Time to Buy!

Fla. in top five for home price appreciation

 NEW YORK – May 10, 2012 – Tighter housing inventories are starting to lift home prices, says Anand Nallathambi, CoreLogic’s CEO.

CoreLogic’s latest home price index, which includes distressed sales, shows a slight month-over-month nationwide increase of 0.6 percent in home prices from February to March. But some markets are seeing much more of a price boost this spring, including Florida, which ranked No. 5 overall for home price increases.

“This spring, the housing market is responding to an improving balance between real estate supply and demand, which is causing stabilization in house prices,” says Mark Fleming, CoreLogic’s chief economist. “Although this has been the case in each of the last two years, the difference this year is that stabilization is occurring without the support of tax credits and in spite of a declining share of REO sales.”

States with highest appreciation

According to CoreLogic, the following states had the highest appreciation in March (this includes distressed sales):

• Wyoming: +5.9%
• West Virginia: +5.3%
• Arizona: +5.1%
• North Dakota: +4.7%
• Florida: +4.5%

States with biggest depreciation

Meanwhile, the states with the greatest depreciation, when also figuring in distressed sales, are:

• Delaware: -10.6%
• Illinois: -8.3%
• Alabama: -8%
• Georgia: -7.3%
• Nevada: -5.8%

Source: Melissa Dittmann Tracey, Realtor® Magazine Daily News

© 2012 Florida Realtors®

Pinellas County Home Foreclosure Filings Spike as Prices and Sales Level Off

Whether it was the anticipation of the foreclosure settlement or simply because lenders must eventually move their distressed inventory, initial foreclosure filings in Pinellas County rose sharply in December and January.  This follows the huge drop in filings after the disclosure of the robo-signing scandal in 2010.

Much has been made about the real estate shadow inventory and its effect on home prices.  As a real estate appraiser, my prior analysis showed a distinct link between the available inventory and home values.

With 717 initial real estate foreclosure filings in Pinellas County in January as compared to roughly 400 per month this past summer we could be seeing the beginning of an increased supply of foreclosed homes.  Of course with the Florida foreclosure timeline over 800 days what really matters to the inventory is the number of properties that have made it through the foreclosure process and made it onto the real estate market.  While there does not appear to be an increase in REO (real estate owned) properties recently listed, if lenders have become more aggressive foreclosing on properties, we would expect it to show up first in the number of initial filings.

The number of home sales continues to edge upward with a very slight increase over last January.  As the real estate market continues to work off the overhead of distressed homes, a more rapid resolution to the shadow inventory is necessary for a healthy housing market.  2012 maybe the year that the housing market takes a big step toward normalcy and could provide the last best opportunity to snap up properties at historic bargains.

As the premier provider of real estate appraisals and property valuations in the Tampa Bay area, Marsh Bilby and Asset Value Appraisal and Consulting assists banks, mortgage companies, Attorneys, Realtors, loss mitigators and home owners with a complete line of real estate appraisal and valuation products.

Market Bottom or Beginning of Final Leg Down

In my last newsletter I discussed the sharp drop in available housing inventory and how it has been leading to an increase in the average sale price of residential properties.  The chart below is of Pinellas County and reiterates this fact.  Year over year the total number of sales has increased 16% while the current inventory of homes has decreased almost 42%. The result has been a modest increase in prices of 3.5%.  As depicted in the chart below, the pace of declining inventory and increasing sale price has accelerated in the last six months.  Since the low in February 2011 the average sale price in Pinellas County has increased 22%.  Is this the sign that the housing market has recovered or is there something else at play?

August 2011 Average Sale Price and Current Inventory

It is pretty obvious that the decline in inventory has led directly to this increase, but what about the “Shadow Inventory” we hear so much about?  (more…)

Market Conditions

Far and away the Number #1 question I am asked is, “Marsh where is the housing market headed?” or some variation thereof.  While I am have always freely given my advice when asked, often contradicting the conventional wisdom (see housing bubble and burst), I have been encouraged to more widely disseminate my views.  Contrary to the typical prognosticators in the industry, I perform valuations and market analysis daily.  I have my ear to the ground and can recognize pivot points before they are revealed in the national press.  Perhaps more important is that my analysis is focused on the Tampa Bay market only.  I do not pretend to know what is going on in Las Vegas, I know what is going on here.

What has been most striking over the last several months is the sharp decline in housing inventory and months of supply.  It is very clear that home sales are far out pacing new supply which is driving the average price of a home up sharply.  (more…)

Real Estate News

Laurie Goodman, from Amherst Securities presented her latest findings at the American Enterprise Institute and it is a gloomy forecast.  She describes, “10.81 million homes are at risk of default over the next 6 years. Even if we try to be extremely conservative we can’t get the number below 8.7 million units.”

With defaults already piling up, the shadow inventory of homes has been growing rapidly, and given this new data the number is going to skyrocket. As this chart shows, the total has gone up from 2 million homes in 2009 to 3.35 million as of April, a 67.5% increase already.

The Atlantic explains this shadow inventory chart: “What’s happening to the homes of all those defaulted borrowers that we hear about? Many of those properties are a part of so-called shadow inventory. This is the sort of limbo between when a home’s loan defaults and when the property is put on the market for purchase. The increase shown above is staggering. The shaded area shows mortgages more than 12 months delinquent or in foreclosure (darker blue) and those seized by the bank (lighter blue).” (more…)