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Stockton, Mammoth Lakes & San Bernardino file for bankruptcy

realpropertycheck.com July 18, 2012

Stockton, Mammoth Lakes & San Bernardino file for bankruptcy

According to data made recently available by Trulia.com we still haven’t reached the bottom of the mess. In real estate there is still no recovery  in sight, because many of our country’s largest cities are still struggling with weak demand, high foreclosure rates and maybe worst of all, negative equity is spreading like a wild-fire .

Most of the trouble concerns–the state next door–California, because in the good times expenses tends to let budgets balloon and in today’s leaner times, there is little political will to make the necessary cuts.

Licensing: Wikimedia Commons, Wikipedia.org

And while California as a state has (not) been ‘dealing’ with a looming bankruptcy for quite some time by just dodging it.

Living on the edge seems to be the ‘new normal’ and many Californians just seem shrug the impending doom and gloom off. But apparently kicking the can down the road is obviously not a sure-fire concept to handle the situation as Stockton, Mammoth Lakes and San Bernardino have shown. These three cities have one fate in common, they are now all bankrupt.

Stockton is located in the Central Valley; Mammoth Lakes is close to the Yosemite and the Sierras landmark; and San Bernardino, is in the sprawling Inland Empire–locally know as the I.E.–which is just east of Los Angeles.

Municipal bankruptcies used to be extremely rare, but that’s no longer the case and in states like California the bureaucratic  red tape has grown so rapidly, that cutting back is easy to advocate, but very hard to implement. Republican Governors like Arnold Schwarzenegger and Democratic counterparts like Jerry Brown had to recognize that cutting back the expenses to a sustainable level is a rather sisyphean task.

And–according to Huffington Post–the next bankruptcy is just looming around the corner: Compton, CA has to decide until September 1st whether it needs to file for bankruptcy.

Filed Under: The Economy Tagged With: bankruptcy, featured

Record Jump in Shadow Inventory Pushes Total Unsold Inventory to 6.3 Million Units

realpropertycheck.com November 22, 2010

Record Jump in Shadow Inventory Pushes Total Unsold Inventory to 6.3 Million Units

In today’s report released by CoreLogic shows shadow inventory of residential property at 2.1 million homes as of August 2010, or eight months worth of supply, a jump of over 10% from last year (a five months’ supply). Shadow inventory (sometimes called “pending supply”) includes homes seriously delinquent (90 days or more), currently in foreclosure, or REOs (real estate owned, or bank owned). “Visible” inventory, currently at last year’s level of 4.2 million units of unsold supply, includes inventory of new and existing homes which were on the market in August.

Corelogic-08-2010-visible_vs_shadow_inventory
Corelogic Shadow Inventory Report for August 2010: Visible vs. Shadow Pending Inventory

The total supply can be thus estimated at 6.3 million units, a level comparable to the worst levels registered at height of the crisis back in 2008. These numbers don’t even include October’s foreclosure hiccups related to the Robo Gate which may have significantly increased visible inventory as a result of buyers’ reluctance to close due to difficulties in obtaining both financing and title insurance.

What If You Bought A Property Foreclosed Upon By Robo-Signers? Read this.

CareLogic Shadow Inventory Report for August 2010
CareLogic Shadow Inventory Report for August 2010: Shadow Pending Inventory Detail

You can download today’s (2010-11-22) full CoreLogic report right here.

Did you know you can read a Kindle book on a PC or an iPhone? You can download Amazon’s free Kindle app for your PC right here to get access to valuable books instantly. Below you can view an excerpt from “Cashing in on Pre-foreclosures and Short Sales: A Real Estate Investor’s Guide to Making a Fortune Even in a Down Market” by Chip Cummings.

Filed Under: Buying, Selling, The Economy Tagged With: bank owned, delinquent loans, foreclosures, pending supply, REO, residential, shadow inventory

Robo-Signing Settlement in The Works: No Foreclosure Until Loan Modification Fails?

realpropertycheck.com November 16, 2010

Robo-Signing Settlement in The Works: No Foreclosure Until Loan Modification Fails?

UPDATE: H.R. 3808 INTERSTATE RECOGNITION OF NOTARIZATION ACT OF 2010, seen by many as an attempt at legalizing robo-signing, was averted by a Presidential Veto which was sustained when the veto override procedure failed in the House of Representatives on Nov. 17th 2010. H.R. 3808 would have required “each federal and state court to recognize any lawful notarization (…) by a notary public” in another state while legalizing the use of digital signatures and digital-only document storage (see also -> MERS). It does not take a rocket scientist to figure out how this would have both legalized and streamlined the robo-signing of foreclosure documents. Luckily, the President’s Veto stands and the measure cannot be reconsidered by the House or the Senate. This does not resolve any of the current problems caused by robo-signers, however.

50-state attorney general investigation into robo-signing foreclosure practices is reportedly nearing a settlement.

As reported by CNBC’s Diana Olick, Bank of America and JPMorganChase appear to be agreeing to the same framework of a settlement.

1. Banks would pay into a fund administered by attorneys general which could be used to compensate borrowers who can prove valid claims to having been wrongfully foreclosed upon (in exchange , those borrowers would presumably have to agree to forgo ever seeking legal recourse elsewhere).

2. There are talks of some kind of third-party mediation for review of eligibility as per the first point above.

3. Banks would have to eliminate dual track of modifications and foreclosures, which have often resulted in homeowners in negotiation of a loan modification being foreclosed upon by another arm of the lender. Only after all options of modification are exhausted will a bank be able to begin foreclosure proceedings (what looks good on paper can be still subject to interpretation, so don’t celebrate just yet).

i, Robot, Columbia Pictures, 2004
i, Robot, Columbia Pictures, 2004 (buy at Amazon.com)

The final agreement could still look a lot different from this framework.

Principal write downs as part of the settlement have been on the table as well.

Banks are apparently in no mood to lavish money at a compensation fund if they can dodge the bullet.

In an interview last week, Iowa Attorney General Tom Miller hinted at the possibility that

maybe instead of paying huge fines, they [the banks] adequately fund the modification process

What sounds so laudable comes down to this: The arrangement mentioned by AG Tom Miller would keep the money and the leverage in banks’ hands. It is difficult not to wonder whether past victims of the robo gate who had been wrongfully foreclosed upon as a result of a clerical mistake and/or fraud are going to get shortchanged again.

We will keep you posted.

In the meantime, if you happen to be a victim of robo-signing, your property was a subject of a regular foreclosure or a short sale or you cut a loan modification deal with your lender, you could be liable for taxes on phantom income unless you preempt the IRS. Read how you can legally dodge the bullet in: “Negative Equity and How You Can Avoid Tax On Phantom Income From Relinquished Property.”

You can also find out how to get out of trouble with your lender in: “How To Stop A Foreclosure (And Walk Away With Money In Your Pocket).”

Filed Under: Homeowners' Club, The Economy Tagged With: foreclosure, Robo Gate, robo-signing

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bankruptcy building wealth in real estate commercial real estate contract for deed David Lindahl deed delinquent loans distressed properties Donald Trump double-dip Fannie Mae featured FHA financial regulation foreclosure foreclosures Frank-Dodd bill Freddie Mac HAMP HARP HOA home prices house rules keeping records lease option lien loan modifications mortgage mortgage originator no-docs loans notice of default prohibition of steering incentives real estate developers real estate investing Rent to Own REO residential robo-signing Robo Gate seller financing setting the price title insurance unsold inventory wraparound mortgage Zillow

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bankruptcy building wealth in real estate commercial real estate contract for deed David Lindahl deed delinquent loans distressed properties Donald Trump double-dip Fannie Mae featured FHA financial regulation foreclosure foreclosures Frank-Dodd bill Freddie Mac HAMP HARP HOA home prices house rules keeping records lease option lien loan modifications mortgage mortgage originator no-docs loans notice of default prohibition of steering incentives real estate developers real estate investing Rent to Own REO residential robo-signing Robo Gate seller financing setting the price title insurance unsold inventory wraparound mortgage Zillow

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