Condo Foreclosures Stalk the Land

“Foreclosures are the top subject in the economic news today. Will it affect my condominium association too? What can be done?”

 

Foreclosures stalk condo owners like a predator looking for his prey. They are at an all time high in over 20 years, especially in the big cities.  They are evenly split between builders going out of business and buyers that bite off more than they can chew. With owners’ financial houses in complete disarray due to general economic conditions or loss of income, condo foreclosures are becoming a fact of life. This is more common than most would have you believe.

 

Foreclosures on condominiums occur when the current homeowner fails to make his mortgage payment, and the unit is being sold by the bank or lending institution at below market value. It is a devastating situation if you are in the position of having a condo repossessed or foreclosed upon. There is no choice for the bank or mortgage lender to get some money back through foreclosure because of the lack of payment by the owner. In some situations, the bank or lender will allow someone else to make the payments, which gives that person the right to move into the condominium. 

 

When too many condominium owners lose their units to foreclosure, condo associations feel the financial pain. That is bad news for homeowners who depend on them to take care of building maintenance, property insurance, utilities, landscaping, and other amenities that are shared in common.

 

Condominium associations do have options, but most of them are not that palatable to the owners. Boards of Directors can borrow money from a bank, borrow money from the association’s reserve, reduce contributions to reserves, cut back on amenities, reassess costs, renegotiate service contracts, delay capital expenditures, increase monthly assessments, and levy special assessments. They can offer payment plans or loans to the owners. They can waive late fees or penalties to help owners catch up on delinquencies. Some condominium associations are assessing anywhere from $10,000 to $30,000 per unit to make up for the shortfall.

 

There are some actions an association cannot take. They cannot abandon their fiduciary responsibility just because the funds are inadequate, and they cannot abandon the effort to collect delinquencies.

 

Once the condominium association forecloses, the owner typically will stop paying the mortgage and the bank or lender may be willing to accept a deed to the property from the association in lieu of a bank foreclosure. That could result in a faster sale of the unit to a new owner. Obviously, the number one priority is to get someone in the unit who has the money to pay the assessments.

Times have changed. Foreclosure stalkers (politely called investors) are not showing up in bunches at foreclosure auctions to snap up great bargains. We always used to hear about the great times when condominium properties were sold with profit to interested buyers and the associations recovered all their money, plus making a profit that financed the new landscaping at the front gate. Those times are gone!

Foreclosures and Tax Deeds – A Future View

Foreclosure and Tax Deed sales are poised to offer a glut of investment opportunities through the United States. Statistics and emerging trends are proving the point I made six months ago that the greatest investment opportunity in the USA right at this moment is to invest in real estate through Tax Deed sales. Let us examine why this is so.

Zillow.com, a real estate trend tracking site, has hard figures that show that over 3 million homes are either in foreclosure or will enter the foreclosure process in the very near future. In fact, in as little as the next six months, and by the end of the second quarter of 2010, most will be in foreclosure. This trend, based on available statistics, is only the tip of the iceberg! As in the terrible tragedy that befell the Titanic, it is what is hidden under the water that ultimately sinks the ship.

Available statistics only show the visible iceberg, while the real story of Tax Deed and foreclosure sales remain underwater, or put another way, under the radar, where the statisticians can not see the blips yet of the emerging disasters of new foreclosures. News services are starting to report a frightening new trend that is causing the banking and financial sectors to freeze up due to the implications.

Simply put, people who have been suffering from the scams the banking and lending industry imposed upon them in years past, are fed up with the Fed, the bailouts of the banks and other lenders, and the lies that they told, to the point that they are now reacting in a negatively real and tangible way. When they find that they are getting behind on their mortgage payments and are facing certain foreclosure, they take matters into their own hands, and they bail out – literally!

Lenders are now receiving in the mail, in ever increasing numbers, the keys to abandoned homes! Often the homes are gutted of all valuable and profitable fixtures such as air conditioning, kitchens, bathrooms, and even expensive copper wiring. Not all homes suffer from this, but a percentage of the homes will, depending on how angry the long suffering former owners were at the time of them abandoning the home. However, a large number of unadulterated homes left in good condition will also be abandoned, and ultimately added to the mad mix of the foreclosure glut.

Another trend that is scaring the hell out of lenders is the judiciary imposing a ‘burden of proof’ upon the banks or mortgage holders to produce the ‘original’ mortgage document. Most lenders cannot produce this original document due to the Wall Street practice of ‘bundling’ loans and reselling them to foreign investment groups.

The unfortunate consequence of this is that if the lenders cannot produce the original document, they have no proof that they own the loan. The proof is lost in the mix of their making, and they are reaping what they have sown. Banks are starting to lose in the courts, often with the judiciary awarding the borrower the home debt free! The system is in shock and the banks are stuck. They knew this was coming and this is the very reason why the governments bailed them out.

Now for the good news, as every dark cloud does indeed have a silver lining. Given the average redemption period of two years that most counties impose upon the property owner to pay the property taxes, and given that big finance is frozen on the spot, and not willing to pay the taxes owed, foreclosed homes are going to emerge in greater numbers at Tax Deed sales!

All kinds of homes, in good and not so good condition, are going through the Tax Deed sales process throughout the United States right now, and in the near future. Get ready for the Tax Deed boom!

How Do I Get Completely Free Listings of Foreclosures?

There are many ways to get a completely free listing of foreclosures or homes that cannot be paid for anymore. Once you make the decision to invest in a foreclosed home, you will need to look online for free listings. Some of the best foreclosure list contain updated and feature rich listings of all types of homes.

While many people are losing their homes due to foreclosure, other people are basking in the glory of attaining quality homes for less. There are many ways to get a completely free listing of foreclosures or homes that cannot be paid for anymore. Once you make the decision to invest in a foreclosed home, you will need to look online for free listings. Some of the best foreclosure list contain updated and feature rich listings of all types of homes.

This listing should include the specifics such as home size, number of rooms/bathrooms, photos, list price and other common features. There are many ways to obtain a listing such as taking advantage of free trial subscriptions. You will be able to save money and be able to find the best homes on the market.

Other tips to go by when obtaining this free listing is to make sure to expect damages or other minor issues the home may have. Some real estate investors pay for someone to inspect the home for them, which is not a bad idea.

Some websites will offer a free database to in which you can search according to your state and/or city. Most real estate investors enjoy this method, as it is quick, simple and painless. Most of these databases include other search options in order to narrow down your listings such as; county, city, zip code and what particular homes are being auctioned or in the pre-foreclosure list.

The pre-foreclosure list is good for those who are interested in the ‘short sale’ method in which they pay the remaining balance off for a home so the owner does not have to go into full foreclosure. This method is also a favorite of real estate investors, as they usually only have to pay less than $10,000 to own the home (in most cases).