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What is the state of the bulk reo industry in 2010

Category: REO Packages

 Let’s get something straight to begin with. There is NO HIDDEN or Shadow Inventory.

I know many of you keep hearing about the second wave of foreclosures is coming! You are probably thinking that because you are having difficulty in obtaining HUGE bulk bank reo tapes, that the Banks must be holding or hoarding houses back from the market or that perhaps they are about to flood the market with thousands of properties.

We’ve been hearing that for over a year now. I have never bought into it, because as I have always stated, is that the market can handle more inventory than most would think There is so much pent up demand it’s crazy.

The assumption I’ve never challenged, until now, is that these foreclosures even exist! Take a look at the latest numbers crunched over at Foreclosure Radar.   I don’t know how you can argue with the data, the sales volume has been so great it is outpacing the numbers of foreclosures hitting the market. We have been saying that for over a year!

It is important to point out that there are massive numbers of defaults and foreclosure sales that are "hung up". It’s an absolutely huge number, but still, there’s not one person I’ve spoken to that believes that there are masses of foreclosures post sale, sitting inactive that are not even being placed on the market.

The crazy thing is that every investor buyer wants to believe that they can purchase bulk SFR tapes in CA, NV, AZ at 50-70 cents on the dollar. They are so motivated at the prospect that they are willing to treasure hunt for inventory that does NOT exist.

The reality is that our company is calling the banks every single day and I can tell you from experience that nothing exists in CA, AZ, NV in bulk SFR tapes at discount prices (we have strong relationships with almost all the mid sized institutions).

The banks at best only have 1-5 REO properties at a time and they are unloading those via realtors and brokers at NO discount. Asset managers are telling us that most of their bank owned properties are actually selling at full market value without any need to discount! The markets are moving in these states!

The inventory in the Southwest has dried up and the demand is obviously heading east across the Midwest. I can tell you that demand FAR exceeds supply so we only expect bulk SFR tapes in the Midwest and east to last another 12-24 months. The inventory that is available will NEVER be cheaper than it is now.

I am sure many of you have seen large, pennies on the dollar California Single Family Residential "tapes" flying around the internet, but I can assure you that it is NOT authentic product.

Many buyers are frustrated that they can't find anything and it's simply because it's GONE. Anyone telling you that they have $200M – $1B in bulk single family homes at thirty (30) cents on the dollar is a joker or a part of a daisy chain of jokers….

So, check out the bulk market for yourself- the implications are huge for investors, because investors who are waiting to buy may really, really miss the boat….waiting is harmful to your wealth!

 

CREOBA NEWS - Commerical REO Agent Updates

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1 Comment »

One Response to “What is the state of the bulk reo industry in 2010”

  1. Duncan Wierman Says:
    February 6th, 2010 at 3:55 pm

    More supporting evidence of the state of the nation in Bulk REO

    Fannie Mae Offers Subsidy For REO Purchases

    Fannie Mae says it will cover the closing costs on purchases of its REO homes – an incentive the GSE hopes will help it pare down a bloated supply of  repossessed foreclosed properties.

    The nation’s largest mortgage financier has announced a temporary seller-assistance program under which people purchasing a property through HomePath, Fannie Mae’s REO disposition operation, will receive up to 3.5 percent of the final sales price, which can be applied toward closing costs or used to purchase appliances for their new home.

    The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010, the company said. In  addition, many Fannie Mae-owned properties are eligible for special HomePath
    Mortgage and HomePath Renovation Mortgage financing, with as little as 3 percent down.

    “Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover,” said Terry Edwards, EVP of credit portfolio management for Fannie Mae. “Many families are taking advantage of the federal homebuyer tax credit to buy a new home so this is a great time for Fannie Mae to offer some additional help.”

    Recent data from Fannie Mae show an increase in the acquisition of foreclosed properties and an escalating rate of seriously delinquent loans, which means even larger volumes of REOs could be coming down the pipeline.

    According to the GSE’s most recent quarterly filing, Fannie Mae acquired 98,428 homes through foreclosure during the first nine months of last year and sold  89,691 REO properties during the same period.

    Furthermore, Fannie Mae’s monthly summary shows significant growth in seriously delinquent single-family mortgages held or guaranteed by the company. Up from 2.13 percent in November 2008, loans three or more months behind in payments or in the foreclosure process soared to 5.29 percent in November 2009.


    Freddie Mac Teams with Nonprofits on Borrower Outreach Pilot

    Freddie Mac and 13 national and local nonprofit organizations have launched a pilot effort aimed at convincing discouraged delinquent borrowers to pursue mortgage workouts to save their homes from foreclosure.

    Freddie Mac has set up new Borrower Help Centers in four key markets – Chicago, Illinois; Phoenix, Arizona; San Bernardino, California; and Washington, D.C. – which are designed to provide free, one-on-one “holistic” mortgage counseling to delinquent Freddie Mac borrowers. The company is also launching a separate Borrower Help Network offering similar counseling over the phone to
    targeted Freddie Mac borrowers across the nation.

     
    Both efforts rely on nonprofit organizations to contact and work with Freddie Mac borrowers who may be eligible for a modification but never called their lender or became frustrated or uncertain of the process and gave up the fight, the GSE explained. “We know that fear and frustration are keeping thousands of borrowers from getting the help they’re eligible to receive,” said Ed Haldeman, Freddie Mac’s CEO. “So we’re going to address the problem head-on by working together with
    nonprofit partners. These organizations are trusted and valued sources in their communities, and we believe they can make the difference in keeping families in their homes and out of foreclosure.”

    Freddie Mac says “holistic” financial counseling goes beyond mortgage issues and also includes an assessment of borrower debt and credit issues that could  affect a borrower’s ability to stay current on their mortgage after a modification.

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