Michelle Millikin

In the  fall of 2011 many banks were exposed for a scandal commonly referred to as “Robo-signing.”  Essentially the foreclosure epidemic was causing banks to have their employees sign as many as 50-200 documents per day to meet the demands of the flood of foreclosures, not allowing enough time nor resources for the employee to verify the documents prior to signing.  Some admit to only verifying the date, nothing more.  This calls into question the legitimacy of the foreclosures on a basic level – a bank has to prove it actually has the right to foreclose – that it owns the note and accompanying mortgage.

Unfortunately for the bank, the securitization of mortgages and the changes in property-ownership documentation that accompanied such deals can make it hard for the banks to establish clean chains of title and produce original documents.

Now these banks are having a difficult time restarting the foreclosure process and the once booming market for foreclosed homes has come to a drastic slow-down as a result.  Properties coming to auction in the states hit the most hard, such as Arizona, California and Nevada, have dropped 30%.  Many investors absorbing and rejuvenating these properties have simply stopped looking.  Why?

The risk of acquiring a property which has not been properly foreclosed is a huge risk.  Simply said, a buyer may not actually own what they paid for, and are investing in the renovation of, because the seller never had the right to transfer the property in the first place.  Investors of such properties put out the cash, want a quick return and do not want to wait for the attorneys to hash out the details.

And buyers are not flooding in to negotiate short sales like before either.  The theory is that homeowners think the bank will have a tough time kicking them out in this environment so they can live free for awhile, pay off other debts and build up their nest eggs.

End result:  The banks need to promise the full review of all cases but this is slow-going, tedious and time consuming.  In the meantime, lack of buyer confidence in an already weak market leads to further distress on the market.

Yet a properly handled transaction with a trained professional Realtor can help a buyer take advantage of this market.  Call me today to learn how I can help.

People frequently ask me “When do you think the housing market will improve?” Well, my crystal ball has been on the fritz lately but experts indicate that the answer is an unfortunate “Not for some time.” According to Fiserv, a financial analytics company, home values are expected to fall another 3.6 percent by next June, pushing them to a new low of 35 percent below the peak reached in early 2006 and marking a “triple dip” in prices.

The first post-bubble bottom was in 2009 where prices fell 31 percent below peak. The second dip was last winter when prices were down 33 percent. Shortly thereafter there was a surge in the market but it was artificially generated by the robo-signing scandal where loan servicers were rapidly signing foreclosures without proper screening. Banks were brought to a screeching halt upon this discovery.

Now that the scandal has been resolved, lenders are speeding more cases through the foreclosure process, putting more homes on the market, weighing on home prices, yet again.

And we have yet to see the “shadow inventory” of foreclosures that have yet to be released on the market. Some experts estimate the number of homes currently in shadow inventory to be 6 million homes.

Nationwide, Fiserv is projecting home prices will climb a modest 2.4 percent between June 2012 to June 2013.

For our Wausau area local market we may not see the decline predicted for Naples,Las Vegas or Miami nor the increase predicted for Madera, California or Yuma, Arizona but are expected to stagger at our depressed market values for yet another year. Some of the factors working against the market in the near future are the increase in foreclosures and sustained unemployment.

This continues to be an excellent time to purchase for the credit-worthy, residentiaslly and commercially. Please call me to discuss how you can take advantage of the current market conditions.