Foreclosures Pick Up Pace, Banks Work Through Glut

Foreclosures increased again in January as banks continued to work through a large backlogs of defaulting loans in their books, RealtyTrac reports. The number of foreclosure filings — including default notices, scheduled auctions, and bank repossessions — increased 3 percent from December to January.

However, the numbers were significantly down compared to one year earlier, RealtyTrac reports.

Last month, one in every 624 households received a foreclosure filing — a drop of 19 percent compared to January 2011.

Banks had slowed their pace of processing foreclosures last year following a robo-signing scandal, in which banks were accused of approving foreclosure documents without proper reviews. Banks have changed some of their methods in processing foreclosures. Also, the $25 billion foreclosure settlement, announced last week, among the nation’s five largest banks and state attorneys general is expected to lead to a pick up in the pace of foreclosures.

The “frozen up foreclosure process is beginning to thaw,” Brandon Moore, CEO of RealtyTrac, said in a statement. For example, Florida had a 14 percent increase in foreclosure filings in January compared to a year earlier.

Many housing experts view an increase in foreclosures as an important step for the housing market to recover in clearing the glut of foreclosed homes on the market. Foreclosures have hampered home prices in many markets.

“Tax deductions can make homeownership as affordable as renting.”

Unlike renters, homeowners get part of their monthly payments back at tax time. That's because the mortgage interest they pay is (in most cases) fully tax deductible.

For a mortgage payment of, say, $1,000 (principal and interest only), you could purchase a home for $151,426 if you put a 10% down payment on a 30-year loan at 8%. If your payments started in January, your first-year mortgage-interest tax deduction would be $10,862. Assuming you are in the 27.5% tax bracket, you would save $3,041 in taxes--that's $249 per month. So the $1,000 payment mentioned earlier is really $751 when computing the homeowner's tax advantage.

How to Win the Mortgage Game When Relocating

The single smartest move you can make is to put off house hunting until you have a firm idea of your buying power. If you are pre-approved for a loan, you can save considerable time house hunting and mortgage shopping.

A pre-approved mortgage loan is an excellent guideline to help relocating home buyers know how much home they can afford. For the seller, pre-approval is proof that the buyer’s lender feels confident a loan commitment would not be a problem if all the financial documentation were in order.
Pre-Approval Benefits:
• Streamlines house hunting.

A pre-approval identifies how much money the transferee can obtain, so precious time isn’t wasted looking at too-costly homes.
• Offers peace of mind.

You know for sure how much home you can afford, and there is little chance a lender will not make the requested commitment.
• Prevents "house poor" homeowners.

Pre-approval reduces the possibility of you becoming overextended and unable to meet payments later on.
• Boosts bargaining power.

Pre-approved buyers tend to be in an advantageous position when bidding against other buyers, as sellers like knowing your loan is guaranteed.
• Pinpoints best mortgage option.

The pre-approval process helps you identify ahead of time which type of mortgage best meets your personal needs.
Before you jump into planning your move, there are some terrific services we offer to relocating families moving into or out of our area. Let us help you take advantage of them. Send us an e-mail or give us a call.