Foreclosure is a legal proceeding where the propertyholder, usually a lender, obtains a court ordered termination or right for redemption. Foreclosure in the Bay Area is the act of taking control of somebody’s property (in this case houses enclosed in a curved area or section of the shores. ) because they have failed to pay back the money that had been borrowed to buy the property. Introduction In United States the proceeding known as foreclosure on a property is subject to auction through the court .
Many states require this sort of proceeding in some or all cases of foreclosure, in order to protect any equity the debtor may have in the property, in case the value of the debt being foreclosed on is substantially less than the market value of the immovable property. These procedure discourages strategic foreclosure issues where a deed is issued to the winning bidder at an auction. Other states have adopted “statutory” or “non-judicial” foreclosure procedures where the debtor is given a notice of default and the property is sold in a form prescribed by stature.
Here if the debtor fails to pay or use other lawful means to hold procedings then the public auction is conducted and the highest bidder at the auction becomes the owner of the property free and clear of any interest. Further legal action, such as eviction may be necessary to obtain possession of the premises. (Killelea, 2008) Foreclosure in Bay Areas A record numbers of people in Bay Areas lose their homes to foreclosure, at record lows and prices slumping and this real estate malaise directly hurts many homeowners, particularly those with risky absolute mortgages which are now seeing equally dramatic increases in foreclosures.
(Coit, 2008) This predicament has spread to the point where many analysts say the country is in decline. According to DataQuick Information system, a research firm on foreclosures, depreciation makes it harder for people when they fall behind in their payments to either sell or refinance their way out of trouble. This rising tide of foreclosures is certain to aggravate the market situation. A lender will foreclose on a home and put it up for sale at a discount and this puts more downward pressure on the market making even more people get foreclosed on. The numbers of foreclosures are huge compared with current real estate sales.
The foreclosure crisis is currently a hot-button political issue as its fallout includes multibillion-dollar losses on Wall Street; widespread job loss in industries such as finance, construction and real estate; and the continuing downward housing spiral. (DataQuick, 2008). Politicians and regulators have been scrambling to find solutions, such as loan modifications, in which lenders agree to temporarily or permanently freeze interest rates at lower levels for struggling homeowners. The US congress passed and President Bush signed into law a temporary change to the tax code. For the period Jan.
1, 2007, through Dec. 31, 2009, homeowners will not have to pay tax on any debt that is cancelled except maybe when it is not on the borrowers’ primary residence. (CBS, 2008). Other than the falling prices due to more houses on discount sales, more Bay Area homeowners may find themselves out of their houses due to sluggish sales and mortgages that let borrowers pile up debt faster than they can pay it off. Borrowers sign up for mortgages at very low monthly rates due to attractive marketing terms but face higher payments due to high inflation and the situation continues to worsen.
Adjustable loans are a big threat. Some loans payment options allow borrowers to pay so little each month that they quickly end up owing more than they borrowed. The effect on payment increase is a cash flow problem that triggers delinquency therefore much greater risks. (Hernandez, 2008). Kottler notes that according to LoanPerformance, a service that analyzes mortgage risk for institutions about seventy five percent of Bay Area homeowners have mortgages with payments that start at a low level and rise over time.
Positive trends on foreclosure activities According to Kottle of the San Francisco Chronicle taking a note from Bob Caruso, a national servicing executive at Bank of America 2006, the banking industries avoids at all costs to getting involved in foreclosure activities because they lose money on the activity, therefore they prefer to advise and guide potential and delinquent borrowers on ways of coping with their mortgages. In some cases banks are willing to give the homeowner more time to catch up on payments.
They are motivated to work with borrowers and avoid extra costs, and are often more than happy to assess client’s finances and buy them time for recovery. In line with DataQuick real estate information service, foreclosure activities are on the rise, but they are still well below historic highs. Considering the number of delinquency notices served by loan firms, a very small percentage get foreclosed furthermore foreclosure activity has been kept near record lows because rising prices allow homeowners to build equity quickly enough to stay ahead of their debt.
Foreclosure avoidance Kottler noted from Bob Caruso that most customers lose homes because of not involving the banks as a source of the solution. Foreclosure is a process that takes a lot of time since the time of notice to time of actual auction; the homeowners have some ample time to revert the situation. Talking to the lender to explain reasons for missing out on payments and trying to work out a recovery plan is the recommended approach to foresight on foreclosure. (Kottle, 2006).
To avoid foreclosure a home owner ought to have a other options such us alternate financing or arrangements for reviewal of terms of repayments with the lender. Conclusion According to DataQuick recent releases, as the market continued to works its way through declining home values, a pool of at-risk mortgages, the foreclosure surge is on the rise again. Houses prices are declining because of foreclosure resale. More of the homes purchased are in lower price ranges, and sellers are settling for less.
The depreciation in inland areas has left homeowners there with less equity with which to purchase a home especially on the bay area. According to John Walsh the DataQuick president, of late the price decline has been mostly in the inland areas where prices have dropped enough to rejuvenate sales. Latest statistics indicate possibility of greater price reductions on Bay Areas or the coast, where sales have been severely restrained by several factors such as: higher prices, tighter lending guidelines, and inadequate liquidity for jumbo mortgages among others
Work cited: Coit, M. Foreclosures drive Bay Area home market. The Press Democrat. 2008, July 17. Available at <http://www. pressdemocrat. com/article/20080717/NEWS07/100035718&title=Foreclosures_drive_Bay_Area_home_market> Accessed 30th July 2008. DataQuick. Foreclosure Activities. 2008, April 22. Available at <http://www. dqnews. com/News/California/CA-Foreclosures/RRFor080422. aspx> Accessed 30th July 2008. Hernandez, B. Home Sales Down but Foreclosures Still Hot. Contra Costa Times. . 2008, June 18. Available at <http://www.
knowledgeplex. org/news/1891861. html> Accessed 30th July 2008 Kottle, M. Bay Area foreclosures on rise — adjustable loans a growing threat. San Francisco Chronicles. 2006, Oct 27. Available at <http://www. sfgate. com/cgi-bin/article. cgi? file=/c/a/2006/10/27/MNGE8M168T1. DTL> Accessed 30th July 2008 Killelea, P. US Housing Crash. 2008, July 29. Available at <http://patrick. net/housing/crash. html>Accessed 30th July 2008 MacDonald Dettwiler and Associates. 2007. Available at <http://www. mda. ca/>Accessed 30th July 2008.