Columbia SC foreclosures are slowing as banks are increasingly turning to so-called short sales to avoid the lengthy process of selling properties they once only sold by foreclosures.
The foreclosure process slowed sharply in many states that require courts to review home seizures after a barrage of legal challenges to the process lenders use to seize homes. As those backlogged cases work their way through the system, the pace has picked up again. In many so-called non-judicial states, like California and Arizona, where there have been fewer cases backlogged, the number of foreclosure starts has declined.
The loss of homes remains highly concentrated in a handful of hard-hit states and cities, including Columbia SC.
Columbia SC Foreclosures Shifting More to Short Sales
In a short sale, a lender agrees to accept less than the full mortgage balance when a home is sold. The process saves the lender the cost of maintaining and reselling a foreclosed property.
The decline in the pace of Columbia SC foreclosures also comes as five of the biggest U.S. lenders — Bank of America Corp, Wells Fargo & Co, JP Morgan Chase & Co, Citigroup Inc and Ally Financial Inc — ramp up alternatives called for in a landmark $25 billion settlement with states reached in April. Last month, the monitor overseeing the settlement reported that those lenders provided $10.6 billion mortgage relief in the first four months of the program, most of which represented approval of short sales.
Attorneys general in the 49 states that negotiated the deal had hoped the settlement would prod more lenders to modify loans and write down principal balances for underwater homeowners. The pace of principal write-downs has also been slowed because the federal regulator overseeing Fannie Mae and Freddie Mac has refused to allow the write-downs. Fannie and Freddie hold more than half of all residential mortgages.
Columbia SC foreclosures can take a long time to sell, and depress other property values in the meantime. Ever wonder why that house on your street is just sitting there and making the neighborhood look run down?
It’s not hard to spot these un-cared for homes with the peeling paint, overgrown lawns, and bushes that look like they haven’t been trimmed in years. Chances are, they haven’t been.
Why Aren’t Columbia SC Foreclosures Selling?
Some Columbia SC foreclosures are taking nine to fifteen months to sell. Rules and regulations can be tough, depending on the state. Fannie Mae deals, for example, adhere to strict guidelines. Once the price is set, it can’t be reduced in the first 30 days, but few buyers are willing to pay full asking price for distressed homes. After a month, the price is lowered incrementally by 5% or 10%. Because Fannie Mae and Freddie Mac focus on the bottom line — and not how a property looks — this leaves little room for negotiation.
Banks are slammed by high foreclosure volume and the additional scrutiny resulting from improper foreclosures of the past. Some have wondered if banks are concerned about flooding the market with foreclosures, and it now seems that banks are more comfortable foreclosing again.
How much time does it take to settle a typical foreclosure? Try 370 days — and then add another 180 days before it’s actually sold. That’s more than a year and a half to get a run-down property into the hands of a responsible homeowner. This doesn’t even take into account the delays that can be added if there is a tenant in the property. To gain perspective on how bad things are, the average foreclosure in 2007 took just 150 days to close.
The good news is we should see home sales speed up in the near future. In the first quarter of 2012, a 25% increase in pre-foreclosure sales signaled the tide is turning for how banks deal with distressed homes. Banks are becoming more open to pre-foreclosures because they minimize losses. With pre-foreclosure sales, a property is sold by short sale or auction before the foreclosure process is complete. In the first quarter, the average price of a pre-foreclosure home was $27,000 higher than a foreclosure sale.
What Can Be Done About Columbia SC Foreclosures On Your Street?
In the meantime, if there is a foreclosure on your street, or a home that looks like it might fit this category, you don’t have to let it necessarily bring down values in your neighborhood. Talk to your neighbors about taking turns mowing the overgrown yards, and maybe even getting together to trim the shrubbery. Granted, no one likes working for free, especially on someone else’s home, or one owned by a bank, but doing so could help your home’s value in the long run.
If you have questions or concerns about Columbia SC foreclosures, and how they might affect your neighborhood, talk to us. We have other tips and advice we can give you to help prevent a foreclosure in your neighborhood from bringing down the value of your home.
Columbia SC senior citizens are among a growing segment of the population over the age of 50 who are falling into serious mortgage debt. According to a report from AARP, more than three million borrowers over the age of 50 are at risk of losing their homes to foreclosure.
Since the housing crisis began, more than 1.5 million homeowners age 50 or older have already lost their homes to foreclosure, pushing the foreclosure rate among this group to 2.9% in 2011 from 0.3% in 2007, according to the AARP’s Public Policy Institute. And another 3.5 million have found themselves underwater, owing more on their mortgage than their homes are worth.
Columbia SC senior citizens have long been believed to be cushioned from the blow of the housing crisis because they owned their homes outright or hold large equity stakes they could draw from in case of financial hardship.
Columbia SC Senior Citizens Carry More Debt Than Ever
Older Americans are carrying more mortgage debt than ever before, and more older Americans have mortgages than they did 20 years ago.
According to the Federal Reserve, the percentage of families with mortgages held by someone age 75 or older, for example, jumped to 24.2% in 2010, up from 6.3% in 1989. Over the same time period, the amount of mortgage debt this group of borrowers owed jumped to a median of $52,000, up from $11,800.
Columbia SC senior citizens who lose their jobs, for example, have a harder time getting hired than younger workers. And those who do find a job often end up taking a pay cut, making it more difficult for them to afford their mortgage payments.
While the economy is slowly recovering and home prices are starting to stabilize, it may be too little too late for many older homeowners — especially the 3.5 million who are currently underwater on their mortgages.
The AARP report points out a very troubling fact: Many Columbia SC senior citizens don’t have enough time left to rebuild their finances before declining health or disability forces them into retirement and starts eating away at their savings.
Columbia SC housing inventories are down. The National Association of Realtors 
(NAR) reports that inventories fell by 1.3 percent in March, leaving inventories 21.8 percent below their year-earlier levels.
Home sales have now posted year-over-year gains in each of the last nine months. But in almost all of those months, the number of homes for sale has declined.
3 Reasons to Explain Why Columbia SC Housing Inventories Have Fallen:
- With home prices down by one-third from their peak, who wants to sell a house right now if they don’t have to? That’s especially true for the roughly 15% of homeowners who are underwater on their mortgage.
- Banks have decelerated the foreclosure process after they were caught routinely passing off bogus documents to demonstrate ownership. That has slowed the pace at which they’re putting Columbia SC homes back up for sale.
- While investors initially were buying up Columbia SC foreclosures that could be fixed and flipped, or resold, for a quick profit, over the past two years, more investors have been buying inexpensive homes that can be rented out. Those homes are, for the most part, out of the for-sale pool for the near-term.
Columbia SC Housing Inventories Down Only Temporarily?
Of these three reasons for Columbia SC housing inventories to be down, the first two would imply that the downturn in listings is artificial, and possibly temporary. But the role of investors in today’s market could make the drop more lasting.
The NAR report also showed that the West was the only part of the country to see a year-over-year decline in sales during the month of March. The drop was almost solely concentrated around properties priced below $100,000, where sales were down 19 percent.
Are there any other reasons you can think of that would be causing Columbia SC housing inventories to be unusually low right now? We’d love to hear your comments.
If you are in the unfortunate financial position where you are losing your Columbia SC home due to foreclosure or short sale, your credit score is probably going to take a pretty hard hit.
In “normal times,” this could make it really tough to rent your next place of residence. Luckily, these are not “normal times” and most landlords are understanding of renters’ financial distress.
Losing Your Columbia SC Home, Better Days are Within Reach
Whether you believe it right now or not after losing your Columbia SC home, better days are within reach. To prepare for those better days take steps now to minimize the damage to your credit, your rental prospects and your future.
Just because you are defaulting on your mortgage, don’t default on other bills. You still need to pay your cell phone, cable TV, car loan, etc. while you are in the process of working out the details of losing your Columbia SC home.
Each additional account you default upon will further hurt your credit score, so keep up the payments if you can.
Losing Your Columbia SC Home? Consider a Short Sale
Rather than just losing your Columbia SC home to foreclosure, consider a short sale, which will do less damage to your credit score. A short sale will allow you to relinquish your debt in writing as well as get rid of uncertainty and stress. Negotiating a short sale should give you much better chances as opposed to just letting it go to foreclosure.
Banks are also very open to short sales these days and working with the bank should bring the best outcome to everyone. Your new landlord will also highly value the fact that you tried to mitigate damages by doing a short sale and taking care of your property during the process.
Never Get an Eviction
Lastly, don’t ever get an eviction on your record. If you are losing your Columbia SC home to foreclosure, work with the lender for an orderly move out. It might be nearly impossible to explain to a potential new landlord why an eviction should be overlooked by them.
When looking for a new place to rent, explain your situation and how you only defaulted on your house but not any other responsibilities. Tell them how you handled it maturely and left the house in good condition. Provide the landlord clear evidence that you will take care of their property as well. Doing these things will give you the best chance of being approved for the rental.
Renting after losing your Columbia SC home is much easier these days than in the past. Being professional and responsible, in all aspects of what undoubtedly will be a painful and uncomfortable process, should allow you to find a new place to rent and hopefully start to rebuild your creditworthiness.