| Recently released reports from | | | | Negative equity equals more bank repossessions on |
| ForeclosureDatabank.com, an extensive foreclosure | | | | the market. |
| listings database with around one million foreclosed | | | | • A slowing of the housing market, which includes |
| properties on file, confirm that foreclosures activity | | | | a growing inventory of unsold homes, may make it |
| across the States as measured by total numbers of | | | | difficult for property owners to avoid foreclosure. |
| filings continues the steep trend upward so noticeable | | | | • There inevitably will be less credit available for |
| in 2006. The escalation over the equivalent period of | | | | borrowers to refinance their way out of debt. Banks |
| the previous year is a dramatic 46% and the first | | | | and other financial institutions in the subprime lending |
| quarter 2007 up 20% on the fourth quarter 2006. | | | | business have been hit hard with delinquencies in the |
| The activity recorded in March 2007 alone is a strong | | | | last year. Whether the problem is symptomatic of a |
| indicator of the continuing trend into 2007, a 25 % | | | | wider credit problem or related to lax lending |
| increase over filings recorded in February. | | | | standards; by late last year there was an increase in |
| Nevada leads the way with the highest foreclosure | | | | the numbers of subprime mortgages in default by |
| rate, and has done since November 2006; Colorado | | | | more than 60 days. |
| and California foreclosures also dominated the | | | | Rising numbers of all foreclosures will put pressure on |
| rankings, the latter with the highest number of cities | | | | lending institutions to reduce the inventories of REO |
| in the nation recorded up to 6 times the national | | | | in a timely manner. In particular if REO properties sit |
| average for total foreclosure rates of all categories. | | | | too long on the market, carrying costs pile up and |
| California and Florida together accounted for around | | | | bank owners get impatient. |
| 37%of all foreclosures in the USA filed in March. | | | | REO is the institutional name for Real Estate Owned |
| Press releases from major cities across the nation | | | | property, realty that lenders have had to repossess |
| reveal data that suggests filings at record setting | | | | because of mortgage delinquencies. Not all REOs are |
| levels. Massachusetts foreclosure filings reached a | | | | bank foreclosures but by definition all bank |
| high this first quarter 2007, other states report that | | | | foreclosures are REO. |
| their ratio of house sales to foreclosure auctions has | | | | REO statistics for March 2007 include California REO |
| tumbled in 2 years. Rhode Island reports a ratio in | | | | up 37%, Arizona up 34% and Florida and Nevada |
| 2005 at 14 to 1, narrowing this first quarter 2007 to | | | | 27% and 19% respectively. Texas recorded the |
| 3 to 1. | | | | most REO including bank filings in March, with 14,000 |
| The number of distressed properties coming on to | | | | year to date , up from 11,000 same period last year. |
| the market , whether they finally sell at auction or | | | | Harris county, TX, up 147%, got top billing. |
| otherwise, must inevitably impact on the housing | | | | Looking at REO by region; |
| market, helping to drive down property prices in that | | | | 1. Southwest Texas leads the region ( and the |
| neighborhood. Rhode Island reports that the average | | | | country) in Reo filings for the first quarter 2007. |
| price of a single family house has fallen 3% compared | | | | 2. Midwest Michigan and Ohio are ranked 3rd and 4th |
| with the same period 2006. Single family residences | | | | nationally. |
| continue to represent the lion’s share of | | | | 3. Southeast Florida closely followed by Georgia. |
| foreclosure activity; an average of 81% nationwide, | | | | 4. Northeast The region in general does not offer the |
| although this proportion can vary widely state by | | | | activity in REO foreclosures of the other regions in |
| state.. | | | | the nation. Monroe county PA recorded 2.5 per 1000 |
| Pressure from three main areas suggests that a | | | | households, the highest number of REO filings in the |
| noticeably higher number of bank foreclosures are | | | | northeast in quarter 1. |
| and will be coming onto the real estate market in | | | | It’s a no brainer. The opportunities for buying |
| 2007. | | | | well priced bank foreclosure property will be better |
| • One group of home owners most at risk for | | | | than ever in 2007. Some investors have already no |
| future foreclosures are those who relied on house | | | | doubt closed the best deals in town in this first |
| price appreciation to build equity against which they | | | | quarter. |
| need to borrow, with some industry forecasters | | | | There are fewer complications, clearer indications of |
| estimating around $1 trillion worth of adjustable rate | | | | good opportunities in pursuing a strategy of buying |
| mortgages resetting at higher rates this year. | | | | bank REO properties. |