A recent article in The Sun News stated the number of Myrtle Beach foreclosures filed by Home Owners Associations (HOA’s) have more than doubled from 181 Myrtle Beach foreclosures in the year 2007 to 481 Myrtle Beach foreclosures last year in 2008, figures they obtained from local Garden City real estate information company, Sitetech Systems. Sitetech also found 260 Myrtle Beach foreclosures in the first nine months of this year by HOA’s. A Home Owners Association is comprised of all the people who own a house or condo in a given neighborhood or building. It is usually started by the developer of the property, and turned over to a committee of homeowners to enforce any covenants, laws or restrictions that are agreed upon by property buyers. They also collect fees for maintenance of common areas, landscaping and any neighborhood amenities, such as pools, walking trails, tennis courts, gyms and playgrounds. Every property owner must abide by the HOA agreement and pay these dues, and failure to do so creates a situation where the HOA has to take action to enforce the rules and collect the outstanding fees. This is where the foreclosure option comes into effect and increases the number of Myrtle Beach foreclosures on the market.

A great many condos, manufactured houses, and townhomes that are on the Myrtle Beach foreclosure market are not primary homes, but rather second homes for people from other areas of the country purchased during the past decade when the U.S economy was riding high. With the current economic downturn, people aren’t able to continue to pay for luxury items, like second homes at the beach, when the cost of necessities has sky-rocketed and out-of-control government spending threatens the small signs of economic recovery that we are experiencing the last few months. Home values continue to trend downward, even as sales have shown an increase from the Home Buyer’s Tax Credit, and many owners could find themselves underwater on not one, but TWO mortgages.

HOA’s are seeing a marked increase on the number of owners who are behind on their association dues, and under South Carolina laws they have the right to place a lien on the property, and in extreme cases they have the option to file foreclosure proceedings against the delinquent owner. A quick check of any Myrtle Beach foreclosure listing will turn up a significant number of short sales on second homes to try to avoid foreclosure as well. HOA’s are also reportedly seeing an increase in the numbers of owners who simply hand in the keys to the property and just walk away from their second home obligations to secure on their primary residence’s mortgage. Lenders are then sidled with a growing number of bank owned properties that aren’t selling and aren’t producing income.

This is where Coastal Reo Solutions can be of assistance. Our Reo Services team can take the burden off the lender, and our Reo Management agents can secure, preserve, market and capitalize these properties. Visit our contact page to leave us a message or call us concerning Myrtle Beach foreclosures, bank owned and realestate owned properties, or to see how our easy, low-cost comprehensive services compare to other reo asset management companies in Myrtle Beach, South Carolina.

I recently had a chance to sit down and discuss the current climate of Myrtle Beach real estate with one of the most successful and   knowledgeable foreclosed property specialists in South Carolina, Jason Ellis of Coastal Reo Solutions.

Q – Jason, what are you seeing in the Myrtle Beach home market right now?

A – We are experiencing a rise in foreclosure properties and short sales, and I expect that this trend might continue in the foreseeable future. We have seen great gains in the number of homes and condos that have been sold this summer, partly from the First Time Buyers Tax Credit and hopefully because the worst of the recession is behind us. But a great many of those sales have come from the value buyers are finding in short sale and foreclosed properties.

Q - Jason, what exactly is a Foreclosure?

A – This is the lawful course of action that a mortgage lender could employ to repossess your house. Once this happens, you must move out of your home, because possession and ownership reverts to the mortgage holder. If your property is “underwater”, which means its value is less than the total sum of money that you owe on your real estate loan; a deficiency judgment could be pursued by the lender against you as well.  Foreclosures and deficiency judgments could both severely impact your ability to qualify for credit for at least 7 years, and in some cases up to 10 years.

Q – What steps should I take if I am unable to make my mortgage payments?

1.  NEVER avoid your lender. The bank doesn’t want to take your property from you, believe it or not. They would much prefer to work out a solution to the problem at hand, rather than create a new more complex one for themselves.

2.  Document whatever fiscal adversities you face: the loss of a job, salary reduction, medical problems, natural disaster, death of cosigner, etc.

3.  Your lender can’t help you if they don’t know how to contact you! Call, visit, or write to your lender’s Loss Mitigation Department as quickly as possible to begin a loan workout.  Your lender will be more apt to work out a solution with you if they realize you are making an effort to correct the situation before it gets any further out of hand.

Q – What options are available to me avoid foreclosure?

A – I can think of a few that will help prevent a person from losing their home to foreclosure. Of course, every situation is different and that’s why I suggest getting to a professional agent as quickly as possible. They will know all the arrangements and options that are on the table, and they have a better chance of saving your home than you would on your own, in most cases.

Mortgage Modification – Under certain circumstances your lender can modify your present loan to make it more affordable and repackage any missed payments into the new loan. You might qualify for this option if you have recovered from your financial problems and can afford the new payment amount.

Special Forbearance – This is an arrangement that would be made with the lender to acquire a brief suspension of your mortgage payments. The missed payments, delinquency fees and accrued interest would then be added to the outstanding loan balance. The structure of the repayment plan would vary depending on the lender. One lender may add the back payments owed on to the principle amount of the loan.  A different lending company might lower the interest rate on the mortgage, or could even lower the monthly payments for a prearranged amount of time.

Pre-Foreclosure Sale or Short Sale - This option might permit you to sell your property for less money than is necessary to pay off the full balance of your mortgage loan. In a short sale, the mortgage lender or bank agrees to markdown the value of the loan balance because of a financial or economic hardship experienced by the borrower. The property owner sells the mortgaged property for less money than the outstanding balance of the mortgage and turns over the entire amount of the sale to the lender to satisfy their debt in full. Neither side can be said to be “doing the other a favor.” A short sale could simply be the most simple and economical solution to the problem.

Deed In Lieu Of Foreclosure – This option will allow you to willingly return the property to your lender without damaging your credit further. The “deed in lieu of foreclosure” offers numerous advantages to both the borrower and the lender. The chief advantage to the borrower is that it releases them instantly from the majority, or possibly all, of their personal debt connected to the defaulted loan. The borrower also avoids the public embarrassment of a foreclosure proceeding, and they could obtain more liberal workout terms than they might in formal foreclosure actions.

Q – Couldn’t I just file for Chapter 7 or Chapter 11 bankruptcy and keep my home?

A – Bankruptcy needs to be avoided at all costs.  It’s very important to stress that point to the people who find themselves in this unfortunate position. Bankruptcy is the most damaging thing a person can do to their credit. If this is your only option and you are consulting with a Bankruptcy Attorney, provide the attorney’s name and phone number to your bank.  This will at least get the bank, or collection agencies they have hired, to stop calling you directly.

Q – How could your company help a person or institution in the foreclosure process, and how can they reach you?

A – Coastal REO Solutions (CRS) is a firm devoted to stabilizing the Myrtle Beach real estate market by offering property assessment and risk management services of  property and other assets in any stage of foreclosure. We are the Grand Strand’s leading REO and Troubled Asset Real Estate Firm, so no matter what state of the foreclosure process you find yourself in, call Coastal REO Solutions and we will do our best to help you through this troubling time in your life. We can’t help you if we don’t know about your situation, and contacting us early in the proceeding is absolutely vital for a positive outcome. We accomplish this by utilizing our staff’s superior knowledge of market conditions and strategies. Our phone number is 843-839-8406 and our email address is Info@coastalREOsolutions.com.

If you are a buyer, investor, or speculator looking to purchase foreclosed real estate be sure to use the proprietary search application located on our website.  CRS also has access to Bulk REO packages and Bank Notes that may be purchased.

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The analysts noted that lack of consumer confidence and cautionary spending would create even more loan defaults, as unemployment rates continue to rise and the housing market correction carries into 2010. They also foresee a potential rise in the number of borrowers who “strategically default” or “walk-away” from these negative equity loans to escape the underwater mortgage situation and improve their immediate financial situation, at the risk of being able to obtain mortgage financing in the future.

As foreclosure rates increase, once highly evaluated properties in a neighborhood begin to decrease in value, and some estimates put the loss of value as high as 9%. This depression of property values causes the remaining mortgages to go underwater, and creates a spillover effect on foreclosed properties and the generation of additional REO assets. An REO asset is one owned by a bank because it has not sold at auction, usually because the amount owed to the lender on the home is greater than the properties market value. This increase in “underwater” mortgages will inevitably lead to an increase in bank owned real estate. Coastal REO Solutions has many options and services available to lenders and banks to deal with these foreclosures, defaults and walk-aways. Contact us today to learn about all the options available to your institution.

In April, the National Association of Realtors Pending Homes Sales Index rose 6.7 percent. This index is a forward looking indicator of the housing market and is based on the pending sales of existing homes. This index is based on contracts that have been signed in the last two months. These sales are listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. April marked the third consecutive month that the Index has risen. The Index rose to 90.3, up 6.7 percent from the 84.6 that was posted in March.

An economist for the NAR, Lawrence Yun, said “Buyers are responding to very favorable market conditions. Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market.” Continuing, he said “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”

In other positive news for the housing market, the NAR’s Housing Affordability Index rose to 174.8 in April. It was the second highest monthly reading on record after peaking at 176.9 in January of this year. The Housing Affordability Index is an expansive measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income tracking and was begun in 1970.

If you are interested in buying a primary or secondary home in Myrtle Beach, our full service real estate office is ready to assist you. Check out featured properties here ». If you are a lender, banker or asset disposal firm, click here » to learn more about our extremely unique fixed cost “cradle to grave” asset management offer.

…a simple two part solution that will not cost taxpayers a dollar out of pocket

With billions of dollars flowing into various industries and no apparent results or an end in sight, what is the answer? By now, everyone is aware the root cause of the economic downturn is real estate and real estate mortgages.

The solution is simple. The first part everyone will like. The second part will not be so popular, but is an evil we will have to live with.

First, we are all aware that outside of diminishing consumer confidence largely perpetuated by the media; the biggest trouble in the housing industry is SUPPLY. There are simply too many homes for sale! How do we cure this problem? We need demand and urgency…

If Congress would enact a law making every real estate purchase completed prior to December 31, 2009, exempt from Capital Gains, investors would flee the instability of the stock market and flood into the real estate market.

The demand comes from the investors leaving the stock market and others looking to capitalize on the exemption…they have to have somewhere to put their money.

The urgency comes from this being a ONE YEAR exemption. Any home bought in the 2009 tax year will not be subject to Capital Gains Taxes when sold – EVER. With people flooding back into the market not only will inventory/supply dwindle, prices will stabilize, homeowners will regain equity lost, and much more. With regained equity and stability, consumer confidence will be improved and people will start spending money again…and in turn jobs will be created.

The Second part needs a little preamble – A lot of you are going to say this is not “FAIR.” I will retort with my standard answer to this childish word – “NOTHING IN LIFE IS FAIR.” Fair is a word that should only be used by children because the concept or at least the execution of fairness does not exist in the real world.

On to the second part of the solution – Mortgage resets, troubled mortgages, and mortgages in some stage of foreclosure.

These properties are FLOODING the Real Estate market with “For Sale” homes that should not or do not need to be “on the market.”

Congress needs to pass a law resetting every home mortgage for owners that are more than 30 days behind. This means that the deficiency (delinquent payments) would be added to the back end of the mortgage allowing homeowners to get caught up.

Congress also needs to pass a law resetting every Adjustable Rate Mortgage (ARM) to a flat fixed rate in the range of 5.5% to 6.0% and extend out the mortgage term of the loan. This will help the homeowners who qualified at teaser rates, but now cannot afford payments that have increased more than 50%. To stabilize the market, we need these people to stay in their homes and keep them off the market. Is this going to save everyone? Of course not!  Some people can’t be saved and this is just another fact that proves nothing in life is fair.

I know your thoughts – What about me? I have been working my tail off to pay my mortgage on time. Why should they get a break and not me? Well, you are getting a break…just not one that is immediately visible. What good is it if you are paying your mortgage and four of the homes in your neighborhood go into foreclosure and sell at auction for FRACTIONS of their value? If you bought your home for $300,000 and 4 similar homes in your neighborhood sell for $200,000 – your home is not worth the $300,000 that you paid. It is now likely worth $200,000. So, with the loss of property value, your bank may freeze or cancel any equity lines that you have tied to your property. Are you seeing any benefit yet?

Are these two suggestions some magical cure for the economy? No they are not. However, these changes could be a strong foundation to stimulate economic recovery.

Just the ramblings of a Myrtle Beach, SC Realtor®