We could use some good old-fashioned market clearing – maybe this is a start?
JimG brought it up, and our friend Effective Demand has charted the increase in Bank of America foreclosure activity for Southern California – recently their number of auctions has spiked:
More auctions, more short sales, more REOs, let’s GO!
Freddie Mac also announced today:
McLean, VA – Freddie Mac (NYSE:FRE) and New Vista today announced plans to auction hundreds of HomeSteps® REO homes to individual homebuyers in Las Vegas on April 24, 2010 and in California’s Inland Empire on April 25, 2010 in support of the federal Neighborhood Stabilization Program (NSP) and to help more first time homebuyers and owner occupants purchase these homes. HomeSteps is the real estate sales unit of Freddie Mac and markets a nationwide selection of Freddie Mac-owned homes.
Under the 2009 Neighborhood Stabilization Program, homebuyers are eligible for closing costs and down payment assistance when they buy foreclosed or abandoned homes in designated communities that were hit hard by the housing downturn. This federal assistance combined with the federal tax credit will provide the buyer with significant financial advantage in purchasing HomeSteps homes.
“Freddie Mac’s first-time homebuyer auctions in Las Vegas and in California’s Inland Empire builds on our long-standing effort to use our REO inventory to foster new opportunities for new homeowners and shows another way Freddie Mac is working to achieve the Obama Administration’s goals of stabilizing and reviving impacted communities,” said Ingrid Beckles, Senior Vice President, Default Asset Management at Freddie Mac.
“Together with today’s low mortgage rates, these April auctions will enable Las Vegas and Inland Empire families to take advantage of the unique convergence of opportunities that make HomeSteps homes exceptionally attractive values,” said Chris Bowden, vice president of HomeSteps. “Working with New Vista underscores Freddie Mac’s commitment to manage its REO inventory in a way that helps stabilize communities, fosters homeownership opportunities, and responsibly safeguards tax dollars.”
“Owner-occupants are the key to revitalizing and strengthening neighborhoods that have been hard hit by the economy,” said Jim Park, CEO of New Vista. “Working with Freddie Mac, New Vista has created a one day homebuyer event that gives first time and owner occupant buyers an exclusive opportunity to purchase HomeSteps homes. These unique events will help turn hundreds of foreclosed properties into homes for many deserving families.”
New Vista will hold open houses on April 10 and April 17 – 18 in Las Vegas and the Inland Empire so interested buyers can tour the HomeSteps homes before the April 24 and 25 auctions. Potential buyers can also find property descriptions at auction.com/.
It’s amazing how closed the entire process is. I understand that someone has to auction these properties. But it might as well be the local auctioneers. Give everyone a piece of the action.
Interesting that this auction excludes flippers, the usual purchasers of houses at auction. I assume they are also providing financing, otherwise this won’t work, unless these are being treated as standard REOs, with full escrows and title checks, just in an auction format.
The graph seems to confirm the report from the Irvine Housing Blog, quoting a BoA rep, that the flood is coming very soon, for real this time. I’ll tell you that it hasn’t filtered down to REO listings in my area (Riverside)-they are down to very low levels still.
Ramones reference? Hey, ho, let’s go!
This makes sense. Prices really appear to have stabilized and its the opportune time for the banks to move. Granted, now that the tax credit is gone and rates are supposedly moving higher, there should be less demand due to the pull forward effect, but banks can at least clear out some of this 2 year old inventory in the pipe.
Always, the skeptic, I think this was a part of a deal between the banks and the government. The government knew that it couldn’t prop up prices if the foreclosures were really unleashed, so it got the banks agree to drip things out while it used these artificial measures to stabilize prices, at least show signs of a turn around and maybe an upward trend and now can leave it to the banks to move forward again knowing that there probably is still some amount of pent up demand.
Another reason for doing this is that B of A and other lenders have to do this now to combat the recent headlines, which say “stop paying your mortgage, banks will write down the mortgage”.
Unless B of A, Chase, Wells, the Federal Government have some type of stick, a whole lot of other folks who are underwater (regardless of ability or willingness to pay) will stop paying.
So it would make sense that before these principal writedown programs start in earnest in the fall that the headlines start seeing foreclosures ramping up again and banks and the government making public statements that its not a freebie. If you have the ability to pay, but won’t you will be foreclosed on.
Again, I think its all a conspiracy and buyers (including myself) are but pawns in this lunacy.
Well I can’t see how this is anything but a positive for buyers. Just the fact that something like this is happening is great. I’m with Geotpf; financing is the big factor in this thing’s success.
I still believe the tide is turning . . .
I’m with skeptic. Market is up 3-5% from a year ago, and the banks were waiting for this to unload. Typical dead-cat bounce behavior. Let’s see how the spring inventory pans out. If it’s under 10,000 units, then maybe there are legs to this rally. But I figure between 10-20k, we are headed for another dip in the market.
They can flog all that excess inventory in the Inland Empire all they want – it won’t help. First time buyers are not going to buy a house with a massive commute to major job centers during a protracted jobless “recovery” and gas prices slowly rising.
Art Eclectic-I live (and work) in the IE (Riverside to be exact), and I bought a 4 bedroom, 2 full bath REO house with a 30’x15′ family room and a three car sized garage last May. My monthly mortgage payment is $75 a month less than I was paying for a 1 bedroom dump of an apartment with no patio or balcony or assigned parking. The family room alone was about the size of my old apartment.
Soon after I bought, non-short sale inventory completely dried up (it’s less than 25% what it was it was when I was looking). Many long-term renters like myself with steady jobs and half-decent credit would like to buy a house, but get discouraged due to the lack of inventory. I know of others who tried buying a few months after I did but gave up due to not being able to find a house without a crazy bidding war.
Geotpf, I realize that there are plenty of people who will benefit, but the sheer numbers of units built so far away from jobs is astounding. You could place every renter in the IE into an REO and still have tens of thousands sit empty. There were never jobs in area to support all that building.
There are a lot of apartments and people who rent houses in the IE. People who live outside the area don’t understand this.
http://www.city-data.com/housing/houses-Riverside-California.html
43% of houses in the city are rented (plus many apartments; condos are rare in Riverside). Rents here are much higher than total monthly costs of owning a house (including things such as insurance and taxes). Ecomically it makes sense for anybody who plans on sticking around for at least a couple years, has decent credit, a 3.5% down payment ($5,000 or less) and is currently renting to buy a house down the street.
Your argument is that nobody is going to move here from Orange County because most jobs are too far away. I’m not saying they will-I’m saying people will move from a rented house to a purchased one down the block. The people I’m talking about already live here, they just rent as opposed to own.
Soon after I bought, non-short sale inventory completely dried up (it’s less than 25% what it was it was when I was looking). Many long-term renters like myself with steady jobs and half-decent credit would like to buy a house, but get discouraged due to the lack of inventory. I know of others who tried buying a few months after I did but gave up due to not being able to find a house without a crazy bidding war.
Geotpf | April 2nd, 2010 at 1:39 pm
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Totally agree with this. The lack of inventory is a big deal for those of us who are looking to buy.