Comments on Recent Forclosure Articles

I'm sure that many of you heard a national article or some type of headline entitled "Foreclosures hit a record high" (http://money.cnn.com/2009/05/13/pf/saving/foreclosure_willis/) in the last couple of days. This may be true, but let me bring it down to a local level and make a little more sense of it. First of all, lets all keep in mind that the media is in the business of selling media (ad spend, newspapers, websites etc) so naturally, they are going to look for the stories that are going to attract peoples attention. By human nature, people flock to the ailing sick person or the major tragedy or have the "sky is falling" mentality. That is, in my opinion why we see all the negative media. (I can bring you up to speed on the good stuff that is happening now, stay tuned).

Now that we understand why the media reports what they do, lets take a closer look at what a foreclosure really is. I deal with distressed properties both on the purchase side as well as on the sale side everyday.

A foreclosure is as defined by wordnet.princeton.edu/perl/webwn the legal proceedings initiated by a creditor to repossess the collateral for loan that is in default.

That is all it is, in other words someone hasn't paid their mortgage and the creditor (the bank) starts the process of taking back the secured collateral (the home) by going through a formal legal process. This doesn't mean that the property is for sale, or that the bank owns the property, the actually foreclosure process takes months, usually over 6 months to complete. (Another topic for another posting)

Here is the point I am trying to make, most of the "foreclosures" are not for sale. Yes, some turn into short sales and others are taken over eventually by the lean holder. Sorry to disappoint all you bargain hunters. Most of the time the mortgagor and the mortgagee work it out. Right now, banks don't want to take properties because they will loose even more money because we are in a declining market. That is why lending is tight right now, their collateral is not appreciating like it was 2 or 3 years ago. If someone defaulted then, a bank would take back an appreciating asset, sell it and wouldn't take a large hit.

Well, thanks for reading, please post comments, let me know what you think. My next posting will contain Salt Lake County and Utah County Market Statistics.

For any of your Real Estates needs or if you hear of someone in need please contact me.

Bryan Colemere
801-699-4266
bryan@colemererealty.com
bryancolemere.blogspot.com