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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.

Shadow Inventory?

Shadow Inventory Gets More Shadowy

Tim Cavanaugh | April 26, 2010

If you’ve been trying to keep track of the “shadow inventory” of homes that are destined to be foreclosed and come onto the market within the next few years, you’ll be glad to know that the hard-to-determine statistic has been narrowed down: It’s either 1.7 million houses or 12 million houses.

That’s the skinny from a site called CapitalGainsAndGames.com, which cites some comments made last week by Amherst Securities analyst Laurie Goodman:

Laurie Goodman told the National Economists Club today in D.C. 7.2 million are already in the delinquency pipeline, and 250,000 are going delinquent each month bringing the total to 12 million. “Once you’re 60 days delinquent, a foreclosure is highly probable,” she said. Goodman is a Senior Managing Director of Amherst Securities and is widely recognized as the best housing finance economist on Wall Street. (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…)