REO LISTINGS TRENDS: FORECLOSURES CONTINUE TO CLIMB

Experts Predict Elevated Levels of Foreclosures for Next Three Years

Just when everyone thought the level of mortgage defaults couldn’t get any worse, it did in the second quarter of 2009.

It’s now clear the REO properties will continue to be a major factor in real estate listings for at least the next three years. Rising unemployment is now predicted to be the major factor rather than the shaky sub-prime mortgages which helped create our current economic crisis.

Now, as predicted, homeowners who had solid mortgages based on their good credit history are having trouble making payments, due to more job losses as well as cuts in the hours of employees who are keeping their jobs. Mortgage defaults are running at their highest levels since the Great Depression, with 4 percent of homeowners with a mortgage in foreclosure and another 8 percent who are at least a month behind on their payments.

The last time the housing market hit this big a low was in the early 80’s. During that recession, as is traditionally the case, it was a rebound in the housing market that helped the economy out of its tailspin. But leading authorities like Wells Fargo Securities senior economist Mark Vitner says this recession is different and doesn’t see that kind of real estate recovery on the horizon. As a matter of fact, he’s predicting this trend will continue for at least 3 more years.

Currently, refinancing is not an option for many troubled homeowners, because home values have fallen so far – which means they owe a great deal more to the bank that their property is currently worth. Even though many banks and lenders are beginning to offer loan modification programs, many homeowners can’t even afford lower payments because they’ve lost their jobs.

This year, one and a half million homeowners are facing foreclosure. And those numbers are expected to go up, not down – because many of the homes currently in foreclosure still haven’t hit the market as official REO listings. Paul Puryear and Buck Horne of the financial services company Raymond James state that, “Out of more than 4 million homes currently owned by lenders, actively in foreclosure, or seriously delinquent, roughly 1 million are captured in the NAR’s (National Association of Realtors) inventory data and listed as ‘distressed inventory’ in MLS.”

New home construction is certainly no better off. The National Association of Home Builders released their new report – and each aspect of their housing market index continues to track well below the worst levels ever seen in the over 20 years of the report’s existence – in others, it is firmly in uncharted territory.

All this suggests that the number of REO properties will hit even more historic highs in the months to come. More foreclosures than all the experts predicted will occur and the banks and lenders will have to find new and innovative ways to more efficiently get those properties “market-ready” and listed with REO agents to avoid an incredible glut.

To assist with this effort, Frank Patrick, REO expert and founder of ASREOS (the American Society of REO Specialists), is currently working with Rod Beever, President of Leading Edge Companies, to recruit new REO agents and Property Preservation Contractors. Patrick has been at the forefront of the surging REO industry, helping to train agents, brokers and contractors in order to help banks and lenders handle the enormous backlog of REO homes.

“The business opportunity is incredible right now for those choosing to specialize in REO sales and field services,” commented Frank Patrick, founder of ASREOS and co-founder of REO ResQ™, a nationwide franchise of property preservation companies. “Anyone who’s had their career derailed by the economic downturn should definitely consider the REO industry.”

ASREOS, the first national trade association for REO professionals founded by REO experts, offers its member vendors online profiles, an exclusive members-only forum, advice from top REO agents, and access to its exclusive database of REO sellers through their website at www.ASREOS.com.