The Art of Strategic Foreclosure

The Art of Strategic Foreclosure

By Serdar Bankaci 
When a property owner is living in a home where the value of the property drops and the debt owed is much greater than the assessment on the property, that property is said to have negative equity or, in colloquial terms, be upside down or under water.

One way out of this situation is for the owner to go into strategic default. Strategic default is the borrower actively choosing to stop making mortgage payments even though it is still affordable to him, and live in the house until the lender forecloses. The time frame for a foreclosure to be finalized varies, but the owner may have up to a year of living in the foreclosed property rent free, capable of eliminating other debt in the meantime.

Although this will negatively impact the borrower's credit, he will no longer take responsibility for payments on the property. Owners with a positive credit record must carefully decide whether strategic default is the right choice; such an action will dramatically bring down their credit score and effect future borrowing capabilities. They will find it difficult to obtain loans or they will be able to do so only by accepting very high interest rates. Any federal loan will be denied them for at least three to five years after the foreclosure as well.

It is a difficult decision to make, but an option one that has been increasingly employed since the burst of the housing bubble. As many people face a decrease in value by one quarter or one half the amount of their original purchase, making the mortgage payment on the higher value can be just as difficult a choice.

For more information on foreclosures please visit www.defaultresearch.com.

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 Foreclosure cases eased in 2009: report

The number of new foreclosure cases involving property in South Florida leveled off last year, according to a market report. Default Research, a data collection firm based near Pittsburgh, Penn., found that the initiation of foreclosure cases… (visit source article) 

Default Research Inman News - Foreclosure cases eased in 2009

Foreclosure cases eased in 2009

By MIKE SEEMUTH

The number of new foreclosure cases involving property in South Florida leveled off last year, according to a market report. 

Default Research, a data collection firm based near Pittsburgh, Pa., found that the initiation of foreclosure cases in South Florida decreased last year after soaring for two years.

"What we deal with is the initial foreclosure proceedings, which is the lis pendens," or notices that litigation is pending, said Serdar Bankaci, CEO of Default Research. "We basically track properties that are initially being foreclosed upon."  Read More

California Foreclosure Activity Slows Due To Modifications And Regulation

Foreclosure cancellations actually eclipsed real estate owned sales in California for December, and lenders scaled back the depth of discount offers at auction. Loan modifications were the biggest factor, while mandatory one-year delays prior to foreclosure sale accounted for about a fifth of cancellations. With delinquencies still on the rise the real picture is grimmer than this latest good news would suggest. See the following article from HousingWire for more on this. 

 The amount of California foreclosure cancellations increased 26.5% in December to 13,243, primarily due to loan modifications.  And for the first time this number overtook foreclosures reaching real-estate owned (REO) status, according to ForeclosureRadar, which tracks foreclosure activity in the state....

Echoing the report from Default Research, that said foreclosure filings fell across many counties in November, ForeclosureRadar reported a 32.5% drop in notices of default. But, delinquencies continue to plague the market. According to a report from another California real estate consulting firm, Foresight Analytics, delinquencies in Q309 grew 11% for first-lien residential mortgages.

See full article

Pre Foreclosures Stable In '09, According To Default Research Inc.

California, Florida See Decreases in Pre Foreclosures, While Arizona Sees Increase

Mt. Pleasant, PA (PRWEB) January 8, 2010 -- Default Research Inc. (http://www.defaultresearch.com), a premier provider of Notice of Default, Notice of Trustee Sale, and Lis Pendens, said that pre foreclosures remained relatively stable in their seven state coverage area from 2008 to 2009. Since 2004, Default Research has reported triple digit increases from year to year, but this year only Arizona saw an increase in pre foreclosures, while California, Arizona, Florida, and Michigan saw decreases. For more detailed regional area foreclosure statistics listed by county, please visit http://market.defaultresearch.com. 

Arizona Still Increasing

Arizona pre foreclosures (http://www.defaultresearch.com/state/azforeclosure) increased over 8% in 2009 with Maricopa County, the state's largest county, experiencing a unique Notice of Trustee filing increase of 15 percent. The hardest hit cities included Phoenix (24,364), Mesa (6,446) and Glendale (5,007).  

"The fourth quarter saw home inventories begin to decrease and median home prices fell as well," said Serdar Bankaci, founder of Default Research. "Our accurate numbers show that residential foreclosure levels will remain constant, while commercial and non-residential properties will continue to increase."

California Down Over 16 Percent   

California, the country's most populous state, saw Notice of Default (http://www.defaultresearch.com/glossary/noticeofdefault) and Notice of Trustee Sale recordings drop by an average of 16.8 percent in 2009, and Los Angeles County, the country's largest county, saw foreclosures decrease by 16.5 percent. The hardest hit cities with foreclosures in the state were Los Angeles (20,256), Sacramento (13,495) and San Diego (10,745).

Bankaci said, "California real estate indicators suggest 2010 to be similar to 2009 with foreclosures remaining around the same level. However, we do expect commercial foreclosures to increase while the residential market slowly improves."

South Florida Sees Double Digit Drop   

2009 brought a 13 percent drop in the number of unique mortgage foreclosure related Lis Pendens (http://www.defaultresearch.com/glossary/lispendens) in Florida. Miami-Dade County, the state's largest county, saw foreclosures drop by 22 percent. The hardest hit cities included Miami (25,351), Hialeah (4,170) and West Palm Beach (3,714).

"The median home prices continue to decline in Florida along with inventories, and with that steady decline we could be in for a recovery sometime in 2010," said Bankaci, "whose daily pre foreclosure lists, which also include commercial properties, are e-mailed directly to real estate professionals in the region.

Small Drop in Michigan   

The number of Michigan Trustee Sale Notices (http://www.defaultresearch.com/state/miforeclosure) increased just over 1 percent in 2009. However, it is important to note that Wayne County, the state's largest county, saw a double digit decrease of 11 percent. The hardest hit cities included Detroit (12,582), Warren (1,853) and Dearborn (1,790). With these improving numbers, the median home prices and inventories are still falling steadily.  

"The Detroit Area was devastated by the foreclosure crisis and the downturn in the automotive industry as well. Therefore, the future of the Detroit housing market will depend largely on the economy and unemployment rates in 2010," said Bankaci.

 

Default Research Inc. Pre Foreclosure Report By Major Metros

Default Research Inc, a premier provider of pre foreclosure listings and Notices of Default, is reporting that pre foreclosures in their major metro areas, Southern California, South Florida, Chicago, and Last Vegas, showed a mix of solid improvement and steady decline in November 2009.

Mt. Pleasant, PA (PRWEB) December 30, 2009 -- Default Research Inc. (http://www.defaultresearch.com), a premier provider of pre foreclosure listings and Notices of Default, is reporting that pre foreclosures in their major metro areas, Southern California, South Florida, Chicago, and Last Vegas, showed a mix of solid improvement and steady decline in November 2009. For more detailed regional area foreclosure statistics listed by county, please visit http://market.defaultresearch.com. 

Better in the West

One of the hardest hit states in the country through the foreclosure crisis has been California. California Pre Foreclosures (http://www.defaultresearch.com/state/caforeclosure) have been consistently high in Los Angeles County, which has 3.08 percent of its households in foreclosure; Orange County has 3.42 percent of families in foreclosure, followed by San Diego at 4.26, San Bernardino with 7.31, and Riverside is still first with 9.27 percent of families in foreclosure. With Los Angeles Pre Foreclosure (http://www.defaultresearch.com/state/losangeles)statistics down, the outlook for the region is positive, as the area has seen foreclosure rates decline on average 25 percent from the November 2008 to November 2009. Still, the cities with the highest numbers of Notice of Default and Notice of Trustee Sales are Los Angeles (1120), San Diego (1067), Riverside (717), and Corona (505).

Foreclosures Cool in Florida

South Florida lis pendens (http://www.defaultresearch.com/glossary/lispendens) recordings continue to fall from November 2008. Broward, Miami-Dade and Palm Beach each had 1,588, 1,849, and 1398 lis pendens respectively. The five hardest hit cities in these regions included Miami (1048), Palm Beach (585), West Palm Beach (148), Fort Lauderdale (142), and Miramar (139).

Cook County No. 1 by a Ton 

Chicago's Cook County, the nation's second largest county with a population exceeding 5,000,000 people, saw over 4,000 properties enter into foreclosure in November 2009. Default Research tracks Chicago Pre Foreclosure (http://www.defaultresearch.com/state/ilforeclosure) properties and in that area, the five hardest hit cities in Cook County were: Chicago (2152), Cicero (76), Berwyn (69), Des Plaines (68), and Calumet City (65).

Vegas a Good Bet for a Good Deal


Las Vegas Pre Foreclosures (http://www.defaultresearch.com/state/lasvegas), including Notice of Default and Notice of Trustee Sales, exceeded 5,000 in November 2009. Clark County, the state's largest county and home to Las Vegas, had approximately 10.29 percent of homes entering into foreclosure in the past 12 months. The five hardest hit cities in Clark County included Las Vegas (3371), Henderson (751), North Las Vegas (734), Spring Valley (184), and Enterprise (180).
 

Major Metro Areas See Foreclosures Down From Last Year

Default Research Inc Reports Maricopa and Miami-Dade Counties Decrease by Nearly Eight Percent

Mt. Pleasant, PA (PRWEB) October 28, 2009 -- Default Research (http://www.defaultresearch.com), a premier provider of pre foreclosure listings, is reporting that pre foreclosure activity declined in the country's major metro areas from September 2008 to September 2009. 

Maricopa County, Arizona's largest county and one of the hardest hit foreclosure counties in the United States saw Notice of Trustee Sale recordings decrease by more than seven percent from September 2008. In Miami-Dade, Florida's largest county, foreclosure law suit filings decreased by about eight percent from the same time period. Wayne County in Michigan, which encompasses Detroit, MI and is the largest county in the state, saw foreclosure drop by just over 10 percent. For more detailed regional area foreclosure statistics listed by county, please visit http://market.defaultresearch.com. 

The exception to improving pre foreclosure statistics appears to be California. However, as Senate Bill 1137 took effect a year ago in September 2008, it effectively delayed the number of pre foreclosures at least 30 days. Because of this delay, nearly all of the Default Research California statics are up from September 2008, including the nation's largest, Los Angeles County. The number of Notice of Default and Notice of Trustee Sales increased from 5,528 in September of 2008 to 7,504 in September of 2009 in Los Angeles County.  

Many regions are seeing home inventory rates drop to pre 2006 levels, and median home prices have begun to increase slightly," said Serdar Bankaci, founder of Default Research. "Our clients, who are very savvy investors and homebuyers alike, are beginning to take advantage of the low home prices. The economists also tend to agree real estate is currently undervalued, making this the perfect time to buy."

Counties***********Monthly Change*** Yearly Change***% of households
Los Angeles, CA**************3.30%**********35.75%*************3.16%
Cook, IL*******************14.76%**************NA************-2.15%
Maricopa AZ***************-17.59%***********-7.13%*************4.59%
Orange, CA******************0.74%***********20.21%************3.23%
San Diego, CA***************9.04%************20.47%************4.37%
Miami-Dade, FL*************64.09%************-8.17%************4.54%
Riverside, CA****************0.24%************14.48%************9.10%
San Bernardino, CA***********0.91%*************7.57%************7.67%