The Real Story …
News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth
Last week, we spoke fairly extensively about the issues surrounding Foreclosures and Short Sales. This week, we look at some related information on several fronts and finally, we will take a look at the effect of rising interest rates. But first…
Setting the Record Straight… The opening statement of last week’s article/column (a quote from Mortgage Bankers Association®): 1 out of 10 homes are either delinquent or in foreclosure.
While this is a true statement, it is important to emphasize that this is a national number and not reflective of the local market. Alabama, as a whole, fairs much better than the nation as a whole with it’s ranking as number 30 in terms of the number of foreclosures. Alabama’s foreclosure activity between January and June indicated 9,657 properties receiving filings, or one in every 84 homes, according to RealtyTrac.
This number of course does not include the homes whose owners are delinquent. On a negative side Alabama’s number 30 ranking is a worse ranking than its 2008 ranking of number 34. In this category it’s better of course to be down the list than on top of the list!
I haven’t been able to determine Alabama’s delinquency numbers/rating as of yet but will report those and even more localized information as I am able to determine them. Even so, it is safe to say that delinquencies are on the rise and the number of people looking for foreclosure help is increasing correspondingly. That brings me to my next topic…
Foreclosure Rescue Scams
With the economy in recession and the national unemployment rate reaching 9.5% in June, so-called “foreclosure rescue companies” have been emerging to prey on people who are having trouble paying their mortgages, promising to help stop a foreclosure on their home.
In response to this growing problem, the Federal Trade Commission (FTC), the nation’s consumer protection agency, has produced resources in English and Spanish to help home owners learn to recognize scammers and to let them know where they can obtain free help. Home owners can go to the FTC’s “Money Matters” Web site www.ftc.gov/YourHome (en español: www.ftc.gov/SuCasa) to:
- Learn about foreclosure scams, debt, credit cards and other financial management advice
- View the new FTC foreclosure video “Real People, Real Stories”
- Download the FTC’s flyer about foreclosure rescue scams, “A Note to Homeowners,” in English or Spanish
Free copies of the flyer, and any of the FTC’s consumer education materials, can be ordered at www.ftc.gov/bulkorder.
Home owners can find out where to get free foreclosure help at www.hopenow.com or by calling 888-995-HOPE (4673). The Homeowner’s HOPE™ Hotline – open 24/7 – is operated by the Homeownership Preservation Foundation, a nonprofit member of the HOPE NOW Alliance of mortgage industry members and HUD-certified counseling agencies.
Another resource offering free information on the President’s plan to help homeowners, is available at:
The Effect of Rising Interest Rates
We have previously reported the bottoming out of the interest rate decline (which had been the bright light in our current financial environment) … with the predictions by the experts that 4.5% rates (without by down) were now history and that rates by year-end would be at or above 6% with rates forecast to be in the 8% range by the end of 2010.
So what is the impact of these increasing rates? Obviously, larger mortgage payments will be the result; however, that is often difficult for us to put in perspective. Realizing that most of today’s buyers are cash strapped and are financing as much of the home’s purchase prices as possible (generally 96.5%), the impact of rising mortgage rates becomes more obvious with the following observation: Every 1% that interest rates rise is equivalent to a 20% increase in the price of a home!
So how does it impact me … If you’re a seller, you will have fewer prospects for your home, if you’re a buyer, you will get less home for your dollar (if the amount of home you’re buying is based on what you can afford as a monthly mortgage payment)!
Housing is more affordable today than it has been in many years and is more affordable than it’s going to be … Don’t miss this market!
