Editor's Note: This is the first in a series of guest blog posts from members of the RealtyTrac Agent Network. The agents will be sharing their insights about what is happening on the ground in their local housing market, particularly as it relates to foreclosures. Your comments, questions and feedback are welcome.

Gloria Tate
Raso Realty, Inc.

I work with buyers in my area; new jargon and issues are making buying a home more difficult than ever before. It is great to see prices drop.  The opportunity to own a home at affordable prices has never been greater, but getting to the closing table is so much more difficult. Many of the best deals in our area are bank-owned properties. The homes sit for a very long time and the property continues to fall into disrepair. In our city, the bank has taken the property back but they may not have paid all the liens from our code enforcement and generally speaking that does not come up until the final title search is done, so a delay is normal.

Many lenders are working with major law firms on the east coast. This presents a whole new challenge, they use mobile closers who rarely have time to speak with you, and all the fees they charge are usually higher than if you close with a local title company. In my most recent transaction I had a law firm, a title company for the law firm, and a title company on this coast for the title company in Miami. The buyer pays a $185.00 fee for a mobile closer that must be used as per the law firm. I am sure there are many people benefiting from this procedure, but it is the buyer who loses some of the joy of purchasing a home and working with local people in the community.

Multiple offers are not new, but have taken on a new meaning in this market. The lender prices the property below market to create a bidding war and then makes a call for the highest and best bid. It is like being at an auction, but you don’t see any of the competition and you have no idea if you are bidding against the listing agent and or listing office, or how high you should bid. We also have bank-owned properties in our MLS that you may only purchase through an online auction although they are in the MLS. Commissions are lowered, and I am okay with that, but I feel like I have a much more difficult time walking my buyer through the process when the listing agent is in another part of the state.

Bulk Sales in developments are almost becoming the normal procedure to really find a great deal.  The largest problem I have found with these is that a group of investors close on the properties in bulk, and then they offer the homes at a greatly reduced price; however, they are not able to be financed through FHA because of the investor/flip rule. Buyers are really the big winners in this market, but the key to a successful closing is truly in the hands of the agent representing that buyer.

These are just a few of the issues in my market. Please let me know if you have any questions or comments.

Contact Gloria or post comments below.

According to the RealtyTrac U.S. Foreclosure Market Report issued today, the total number of properties with foreclosure activity in April reached the highest level on a monthly basis since RealtyTrac began issuing the report in January 2005. Foreclosure filings were reported on 243,353 U.S. properties during the month -- certainly a big number, although only a tiny fraction of the nation's 126 million total housing units. Still, nearly a quarter million properties in one month can have a significant impact on a housing market that is registering about 5 million existing home sales for the entire year.

"Although only about 2 percent of households nationwide will be in some stage of foreclosure this year, these properties contribute to already bloated inventories of homes for sale, and put downward pressure on home values," said James J. Saccacio, chief executive officer of RealtyTrac. "Areas of California, Florida, Nevada and Arizona continue to be particularly hard-hit. Property tax bases are eroding, putting municipal budgets in peril. For example, the city council in Vallejo, California -- part of a metropolitan area with a foreclosure rate that ranked sixth highest in the nation in April - last week voted to have the city file for bankruptcy."

View full RealtyTrac report.

We'd like to know more about how foreclosures are affecting local housing markets across the country. To get the conversation started, we've asked some members of the RealtyTrac Agent Network to provide insight into their local markets in a series of blog posts on Foreclosure Pulse over the next few days. The first post is provided by Gloria Tate of Raso Realty, Inc., in Cape Coral-Fort Myers, Fla. -- where the foreclosure rate ranked fifth highest among the 230 metro areas tracked by the RealtyTrac report.

View Gloria Tate's post about the Cape Coral market.

Look for more local market perspectives coming soon and please post a comment on any of these posts if you have something to add, a question or a different perspective.

It may have been created and chartered by the federal government, but Fannie Mae (the Federal National Mortgage Association) is first and foremost a private company responsible to shareholders for running at a profit. And as with many corporations in this country, the national economy is kicking Fannie around…fast and hard!

One of the nation’s two Government Sponsored Enterprises (GSEs), Fannie reported a first quarter net loss of $2.2 billion — attributable at least in part to an increased number of foreclosures. Although an improvement over the $3.6 billion loss reported for Q4 2007, it pales in comparison to the $961 million profit the GSE reported for the same quarter a year ago.

CNNMoney reported last Tuesday that Fannie’s CEO Daniel Mudd is optimistic overall about the company’s future, but sees more challenges lying ahead for the rest of 2008 and possibly beyond.

“As the initial shock of home price declines dissipate and markets settle down from volatility of the last nine months, we’re seeing tremendous opportunity. As the market recovers, we will be a prime beneficiary,” Mudd said during a conference call with investors Tuesday morning.

As a result of the losses, Fannie is revising its forecast for home price declines from a 5 to 7 percent loss nationally for all of 2008, to a 7 to 9 percent loss for the year, with significant regional differences in the rate of home price declines.

Credit-related expenses for the quarter rose from $3 billion for Q4 2007 to $3.2 billion for Q1 2008 as a result of higher charge-offs, defaults and average loan loss severities, the company release notes.

However, foreclosed property expenses decreased to $170 million for the latest quarter, from $179 million in Q4 2007. Still, Fannie’s largest credit losses were concentrated in the states with the largest home price declines — California, Florida, Michigan and Ohio — four states that have remained among RealtyTrac's top foreclosure states in the nation for more than a year now. And it recognized $1.1 billion in losses for the quarter for mortgage-related securities backed by Alt-A and subprime loans.

In order to buffer it’s balance sheet to ride out the rest of the economic downturn, Fannie also announced that it will lower its stock dividend to $0.25 a share starting in Q3 2008, and plans to raise $6 billion through public stock offerings.

Fannie’s outlook for 2008 anticipates further weakness in the housing market that will lead to more delinquencies, defaults and foreclosures on mortgage loans and slower growth in U.S. residential mortgage debt for the year.

In the end this translates into continued opportunity for patient home buyers and real estate investors to pick up some good deals on real property for at least the remainder of 2008 and potentially into 2009 as well.

The prolonged housing slump is having a measurable effect on the overall economy, and not just on home furnishings and housing supply chains (like Linens N’ Things, which recently filed for bankruptcy protection).

Results of a survey conducted during the fourth quarter of 2007 by The NPD Group, a market research firm servicing the retail sector, revealed a direct correlation between areas hard hit by the housing crisis and a marked decrease in the sale of consumer electronics — like LCD televisions and notebook computers — and related products such as printer ink and paper.

Five of the hardest hit designated market areas (DMAs) were among the top 30 based on population. The five — Sacramento, Tampa, Phoenix, Detroit and Orlando — were also among the nation’s top metropolitan statistical areas (MSAs) ranked by foreclosure rate, according to RealtyTrac, for the quarter studied by The NPD Group.

Sacramento ranked No. 5 on RealtyTrac’s Top 100 metro areas for the first quarter of 2008, reporting a 135 percent year-over-year increase in foreclosure activity and a foreclosure rate of one in every 55 households receiving a foreclosure filing during the period. Detroit was No. 6 despite a 4 percent decline in activity with a rate of one in every 68 households receiving a foreclosure filing. Phoenix was No. 7 with a 294 percent increase in activity on a yearly basis and a rate of one in every 70 households receiving a foreclosure filing during the quarter.

Orland ranked No. 13 with a 249 percent yearly increase in activity and a rate of one in every 81 households receiving a foreclosure filing, followed by No. 21 Tampa, where one in every 110 households received a foreclosure filing and a 127 percent increase in foreclosure activity was reported from the first quarter of 2007.

The point here is simple. People who bit off more than they could swallow in the last upswing of the real estate market now can’t afford to pay their readjusting mortgages, or their credit card debt, or higher prices on gas and food. So as the effects of the mortgage meltdown continue to trickle down further, how can consumers continue to afford the electronic toys and the supplies for them?

The answer is…increasingly…THEY CAN’T!

We’d be interested to hear your comments on how this trickle-down effect is impacting the market where you live and work, and the ability of homeowners to keep their homes.

One day after President Bush pointed the finger at Congress and told the American public to blame lawmakers for all of their recent financial woes, an inkling of actual positive news came out of Washington Wednesday with two announcements from government agencies.

In the first, and the more closely watched of the two, the Federal Reserve took a much anticipated move to lessen the pressure on the nation’s economy by lowering the federal funds rate another 25 basis points to 2 percent (that’s a long way down from the 5.25 percent the Fed started with when it cut the first 50 basis points off in Sept. 2007).

After 17 consecutive upward “adjustments” as they were called under former Chairman Alan Greenspan, the Fed under current Chairman Ben Bernanke has now cut short-term rates seven times in eight months.

General weakness in the economy was citied by the Federal Market Open Committee as the primary reason for this latest cut. More specifically, however, the Fed announcement highlighted a number of factors for its decision such as subdued household and business spending, soft labor markets, stressed out financial markets, tight credit conditions and the continuation of the housing contraction.

The vote was 10-2 in favor of the cut in the federal funds rate. However, in a similar action taken at the same meeting, FOMC members unanimously approved a 25 basis point cut in the Fed’s discount rate down to 2.25 percent.

In the second announcement made earlier in the day, the Commerce Department said that real Gross Domestic Product (GDP) increased at an annual rate of 0.6 percent during the first quarter of 2008, the same rate of increase as tracked for the fourth quarter 2007.

With this second straight quarterly expansion in the U.S. economy — no matter how slight it is — the New York Times is reporting that the current situation does not fit into the classic definition of a recession, which is a "significant decline in economic activity spread acorss the economy, lasting more than a few months." This is a positive sign to many people (except those who believe we’re already in a recession).

On the plus side, personal consumption expenditures for services, private inventory investment, exports of goods and services and federal government spending helped prop up the nation’s economy for the quarter.

Those positives were offset by an upturn in imports, a downswing in personal consumption expenditures for personal goods, and the housing slump (which the Commerce Dept. calls the “real residential fixed investment”), marked by a 26.7 percent decrease in home sales following a 25.2 percent decrease the previous quarter.

Generally speaking, both announcements are signs that something positive is being done to keep the nation’s economy moving forward, although it seems to be at a snail’s pace right now. However, both reports also reveal the devastating impact housing is having on the overall health of the economy.

There is no quick fix for the current weak state of the economy. Consumer spending is down, while the costs of energy and food are surging, resulting in lower consumer confidence for the immediate future anyway.

What potential homebuyers and investors need to recognize from all of this is that hoping to catch the market at or near the bottom before values start appreciating again is most likely not going to happen.

2008 is definitely a good time to jump into the water and find that property that meets your criteria — and at bargain prices too for the time being (however long that is).

The downward spiral that has sent this nation’s real estate market reeling out of control is far from over yet. For all the election year rhetoric flying around these days about the general state of the national economy, although the situation is not all doom and gloom, the news does not look as good as the politicians would like you to believe…for right now at least.

Being realistic for the moment, for those of you who like to follow market trends, how about these:

• Home prices in 17 out of 20 MSAs posted record low declines in February
• The number of vacant homes in this country have hit a record high
• Consumer confidence fell sharply in March
• Home sales volume in the largest real estate market in the country was down significantly for March

And it’s only Tuesday!

Check out the reports for yourself (see the links above). No matter what you want to call it — a housing slump, a housing sector contraction (thank you Federal Reserve), a mortgage meltdown, etc., one thing is evident…after years of an absurd overheating of market activity we are now in the midst of one heck of a market correction!

It took six years this time for the bubble to burst (although many industry analysts denied it would ever happen). So don’t be surprised now if it takes at least that long to work its way through the cycle no matter what you call it.

The downside of the business cycle is not over yet. And until it recovers, these latest reports are clear evidence that foreclosures are not going anywhere anytime soon.

This is the greatest window of opportunity in a decade for wishful homebuyers and savvy real estate investors to get into the marketplace on a national scale and pick up some good opportunities on the bargain side of the price list.

It’s not over yet, so go for it!

While foreclosure activity in the first quarter of 2008 was up on a year-over-year basis in 90 percent of the nation's 100 largest metropolitan areas, according to the RealtyTrac Q1 report issued today, there were a few notable exceptions that could prove to be a harbinger of hope for the nation's battered housing market. On the other hand, those exceptions could just turn out to be a source of false hope, perpetuated in part by short-term foreclosure solutions that are about as effective as a five-gallon bailing bucket on the sinking Titanic.

The notable exceptions included Detroit — a longtime posterchild for the foreclosure meltdown — and Philadelphia, along with a few other Pennsylvania metro areas. Foreclosure activity in Detroit was down nearly 4 percent from the first quarter of 2007, although the city's foreclosure rate still ranked No. 6 among the nation's 100 largest metropolitan areas. Philadelphia's foreclosure rate ranked No. 82, thanks in part to a 30 percent year-over-year decrease in foreclosure activity.

Dispatches from Detroit indicate that free-market forces may be the catalyst. The Detroit Free Press reported that "Detroit home sales shot up 30.8% in March, spurred by investors taking advantage of low prices on foreclosed properties." Detroit home prices have hit a low enough threshold to become appealing to bargain buyers and investors. That in turn allows lenders to start unloading foreclosure inventory, easing a heavy burden that has been weighing down the city's housing market.

Different forces may be at work in Philadelphia, helping that city's foreclosure rate remain relatively low. A moratorium on all foreclosure sales scheduled in April there has now been replaced by a pilot program that delays foreclosure proceedings on owner-occupied properties until the homeowner and lender meet in a "conciliation conference," according to the Philadelphia Business Journal. Foreclosure sales originally scheduled for April and May will be postponed until at least July.

Meanwhile, foreclosure activity continues to increase at a torrid pace in many of the now-familiar foreclosure hot spots: up 291 percent annually in Stockton, Calif., which posted the highest foreclosure rate among the 100 largest metro areas; up 134 percent in Las Vegas, No. 3 on the list; up 294 percent in Phoenix; and up 249 percent in Orlando.

View full Q1 2008 foreclosure report.

The only kind of whopper a person with this kind of ‘BK’ is going to get is a whopper of a headache. In this, the legal sense for the abbreviation, we’re talking about BANKRUPTCY. And for struggling homeowners it often represents what they think is the last stand they can take before losing their home to foreclosure.

And the scary part is, bankruptcies seem to be back in vogue.

Back in the early 1990s, in addition to double-digit interest rates, high unemployment and a flood of foreclosures on the market, another telltale sign that we were in a recession was an abundance of personal bankruptcies — especially Chapter 7 which wiped out all of a debtor’s unsecured debt.

The federal government clamped down on that “loophole” with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. According to published reports, more than 2 million Chapter 7 bankruptcies were filed that year (an all-time high) right before the new bankruptcy law went into effect.

Well, the American Bankruptcy Institute just released its numbers for calendar year 2007 and consumer bankruptcies were up 37.6 percent over 2006 to 822,590 filings (60.9 percent of those being Chapter 7 filings and 39.1 percent being Chapter 13 filings to come up with a supervised repayment plan).

“The latest figures ratify trends that began last year, depicting households under growing stress from heavy consumer debts, now in homes they can’t afford and can’t sell,” said ABI Executive Director Samuel J. Gerdano, who expects consumer bankruptcies for 2008 to top 1 million, according to a Reuters report.

As Bloomberg.com recently reported, the likelihood of Gerdano’s prediction coming to fruition is more than a possibility given that more than 90,000 bankruptcy filings were reported for March 2008 alone, a 30 percent increase from a year ago.

Of ABI’s top 10 states with the highest per capita filing rate for 2007, four of them — Georgia, Michigan, Ohio and Nevada — were also some of RealtyTrac’s top 10 foreclosure states for much of the year.

In the meantime, executive search firm A.E. Feldman reported that law firms have already started gearing up their staffs to handle the anticipated increase in bankruptcy workload.

What all this does is add more fuel to the recessionary fire just like back in the 1990s. What consumers/distressed homeowners need to understand is that bankruptcy does not STOP a foreclosure proceeding, but merely delays it. Once the foreclosing lender gets clearance from the bankruptcy judge on the case by dismissing the stay on the foreclosure, the lender can proceed with the process.
 
In the end, more bankruptcy filings may translate into more short sales down the road, or possibly more people simply walking away from their homes — with or without a deed  in lieu of foreclosure — in essence handing the keys back over to the lender.

Whether the net result is a short sale, a walk away or going through the whole foreclosure process, it seems like the foreclosure fires are likely to be fanned still higher, with more properties being available for home buyers and investors looking to find a bargain in many parts of the country for the foreseeable future.

At present it does not appear that there is enough evidence yet to declare that a market comeback is in the offing. The bottom line is that no one can say anything with 100 percent certainty given the current state of our national economy.

Even the National Association of Realtors, which has come out with its latest report documenting a two percent decline in existing home sales for March 2008, down 19.3 percent from March 2007, can’t be certain. Although industry analysts were anticipating this monthly decline, according to Mortgage News Daily.

The NAR tried to be positive about the nation’s situation earlier this month in stating that, “Existing home sales could start to show a sustained increase within the next few months.” But, obviously, it’s too soon to make such a bold statement.

The median home price nationally also declined for the month, down 7.7 percent from $217,400 in March 2007 to $200,700 last month. Home inventory continues to be a huge problem for the Realtors, currently up to a 9.9 month supply (that’s up from a 9.6 month supply in February).

While everyone is worrying what the Federal Reserve is going to do next to try and stabilize the economy and keep it from falling deeper into recession, a slight bit of good news also came out this week with the announcement that home prices rose 0.6 percent in February.

According to the official statement of the Office of Federal Housing Enterprise Oversight (OFHEO), a monthly increase in prices was reported between January and February 2008 for seven out of the nine census divisions tracked by the agency. Only the Mountain and South Atlantic regions documented price depreciation for the period, while the Pacific, West North Central, West South Central, East North Central, East South Central, New England and Middle Atlantic regions all reported an upswing in prices.

Still, prices nationally are down 2.4 percent on a yearly basis from February 2008, and down 3.1 percent from their peak back in April 2007.

Given the overall mood of the nation at this time, and the lack of consumer confidence reported by many analysts, investors and prospective home buyers don’t need to worry about a market comeback anytime soon. There will be plenty of time and a large selection of properties to choose from when deciding which ones are in the right locations for them and at the best bargain prices.

In desperate times people resort to desperate measures. Facing foreclosure, some homeowners are setting fire to their homes for the insurance money. But they usually end up with a criminal conviction instead of cash.

Consider the following:

In South Carolina, a homeowner was charged with burning her home on the eve of foreclosure.

In Massachusetts, there’s a growing concern that foreclosure arson is becoming a problem around the state as more and more properties are abandoned.

In Colorado, a homeowner was convicted for setting his home on fire to prevent the lender from repossessing the property.

“We’ve seen a dramatic increase in this kind of fraud,” Dan Bales, the head of fraud investigations at Mercury Insurance, told the Los Angeles Times. “People upside-down on their house with variable-interest-rate loans, or upside-down on their cars, are pretty quick to burn their property right now.”

Foreclosure arson has doubled in California from 7 homes last year to 14 homes so far in 2008, according to insurance officials. These crimes are expected to rise as the economy continues to worsen.

Even after being convicted of the crime, the homeowner still has to pay off the lender — and the damage doesn’t end there. Neighbors are getting burned too, when higher premiums are passed on to them by insurance companies.

What are your thoughts on this hot topic? ForeclosurePulse wants to know.