johnnymk

http://www.heraldtribune.com/apps/pb...NESS/607070411

Gee...who would have thought.....

In the first quarter, Florida had more foreclosures than any state except Texas

By MICHAEL POLLICK

michael.pollick@heraldtribune.com

From the magnetic sign on his car -- "We Buy Houses" -- to his Web site -- "FloridaHomeRescue.com" -- Jim Willig is not shy about what he does for a living. He buys homes from owners who have gotten themselves into a box.

And, say Willig and other practitioners in the region, business is picking up.

"People point the finger at us and call us vultures," said George Huhn, a Venice-based foreclosure specialist and Realtor. "We are actually a solution. We are not tying widows and orphans to the railroad track."

After three years of happy times and quick sales, real estate foreclosure is back. The U.S. real estate market has cooled, and foreclosure rates, while still manageable, are notching upward and are almost certain to head higher.

States that led the way with zooming prices -- Florida, Colorado, California -- are among the most vulnerable. In the first quarter, Florida had more foreclosures than No. 3 California and more than any state except Texas, reports RealtyTrac, an online marketplace for foreclosure properties. In May, the Sunshine State had the eighth-highest foreclosure rate nationally -- one for every 821 households.

In a RealtyTrac study of the top 100 metro areas, five Florida communities showed up in the top 20 hardest-hit list: Jacksonville at No. 7; Orlando, 21; Lakeland-Winter Haven, 23; Miami-Fort Lauderdale, 24; and West Palm Beach-Boca Raton, 28th.

Sarasota-Bradenton was 55th.

The distress isn't limited to Joe Six-Pack. Many pros and semi-pros are starting to wish they owned fewer homes than they do, especially if they bought recently.

For the distressed-property crowd, those lemons are becoming ripe for squeezing.

"This goes hand-in-hand with the softening housing market and rising interest rates," said Greg McBride of BankRate.com, which reports mortgage rates and other data from North Palm Beach. "This is probably just the beginning, and certainly not the end."

A market sliding toward distress

Willig got in the business four years ago, after leaving behind a Chicago bank marketing job to help an aging relative in Sarasota.

During big boom years 2004 and '05, Willig was only able to acquire one distressed property a year. So far in 2006, he has managed to buy two -- one in North Port and one in Port Charlotte, markets most experts agree are ripe for foreclosures.

Following his cookie-cutter approach, Willig picked up the Port Charlotte house, worth $170,000, for $120,000. A bank had provided the owners with a new loan for $185,000 and they were defaulting.

Willig fixed it up with paint, carpeting and trim -- $5,000 worth of labor -- and sold it for $170,000.

"That is real world," he said, referring to the labor and the price. "It is hard to do."

With the adjustable-rate mortgage factor coming to bear, many experts are predicting that "distressed property" is about to become a much more common term.

"The adjustable rate picture is the thing that causes us the most concern over the next year and a half," said Rick Sharga, RealtyTrac's marketing chief. "I've heard estimates from hundreds of millions to one trillion for the amount. They are all big numbers."

A typical example is a $300,000 adjustable-rate loan issued in 2003 under a marketing plan called a 3-1. The rate stays fixed at a low rate for the first three years, and then readjusts to match real-world rates every year for the life of the loan.

"Say the intro rate was 3.5 percent," Sharga said. "You're paying $1,300 a month for that loan. When that loan hits its anniversary date this year, you are going to be looking at $1,800 to $2,100.

"If all you've been getting is a 2 to 3 percent cost of living increase at your job, where are you going to get another $500 to $800?"

The resets are occurring against a backdrop of higher credit card rates and gas prices.


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“Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.” (Winston Churchill)

gwilks98

I love foreclosures. When people get thrown out of their home, many of them trash it. They don't take care of what's not going to be theirs anymore.

some bozo comes in and buys it for cheap, adds some (usually cheap) cosmetic repair to cover up anything that really needs fixing and sells it for market value to some schmoe that doesn't know better.

As a general rule, I tell people to stay away from rehabs unless you personally know the seller.

__________________
"I know the pieces fit, cause I watched them fall away."

"Cold silence has
A tendancy to
Atrophy any
Sense of compassion."

MJK

LegendKiller

While I generally agree with above, this time foreclosures aren't because the people are just stupid with their money. Well, ok, it is, but they aren't your typical stupid people. These are the ones who bought in to reap profits, with the full intent of selling in the future, so they want to keep it nice.

However, they got caught in the slowdown or slight downturn, and have to get out or risk losing all of the equity.

FL is even more unique, given that its full of decent houses (albiet some really crappy ones, and mold) that has been hit by multiple financial issues. Mainly super-high storm insurance and now large levels of depreciation.

Personally, I think this tick up is just the tip of the iceberg.

mcs328

My from the hip response is yeah all those greedy people are getting what they deserve because in my experience that's what people were doing. Flipping property left and right. But they when I think about my own personal experience when I bought 2 years ago, it's not people are stupid with their money alone but when you interact with all the people involved in the process, it's just overwhelming. Owners driving up the price, real estate agents driving up the price for bigger cuts, loan officers pressuring you on Interest Only loans, home owner groupthink...etc. It was like dealing with a car salesman. You knew you were getting screwed by someone but you really need to get your foot in the door. I look back and I go...wow...I'm lucky I got some equity...and wow...there was some high pressure sales tactics going on.

Anyways...I don't feel bad for the greedy home owners. I do feel bad for the first time buyers, and newlyweds who just want a home to call their own. And it ticks me off that middleman can laugh all the way to the bank.

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