Scotsman Guide > Residential > July 2014 > Department

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Residential Department: From the Editor: July 2014

 

From the Editor

Distressed properties haven’t gone away.

Since the doldrums of the recession, distressed sales have made up a sizable portion of the residential housing market, and even with the economy extending its rebound, that much continues to be the case. This past year, short sales and foreclosure-related sales made up 16.2 percent of all residential sales in the United States, according to RealtyTrac. That marked a 1.7 percent year-over-year increase in this category.

Point being: Although the rate of foreclosure starts continues to drop, the housing market — and originators — still have a wealth of distressed assets to work through. RealtyTrac reports that there are 1.2 million properties owned by banks or in the foreclosure process, and that’s just the properties on record. The shadow inventory is another matter altogether, although this looming threat seems a lot less scary these days, as multiple industry analysts have reported drastic reductions in the shadow inventory’s size. Read more about this topic in this month’s BackSpace on Page 114.

In any case, you can rest assured that distressed properties are here to stay, so it may be a good idea to incorporate this segment of the market into your game plan for the coming months. Invariably, many of the aforementioned properties are going to need a little TLC (and then some), so originators should consider learning more about rehabilitation loans if they haven’t already done so. On Page 48, Kevin Cloyd of Carrington Home Solutions LP breaks down the Federal Housing Administration’s Section 203(k) program, which itself consists of three distinct loan types.

The market’s inventory of distressed properties affects more than your customers’ choice of loan, however. According to Kelevision LTD’s Kelly Guest, the recession and the subsequent surge in foreclosures and distressed properties helped create a truly savvy customer base, which means that originators should change the way that they approach their marketing. Read Guest’s article on Page 40.

Of course, many originators have already made recent alterations to their marketing methods, choosing to pursue purchase-centric business instead of refinances. One can hardly blame them — as interest rates have climbed, refinance activity has dropped off — but originators would wise not to spurn refis entirely. As MyMortgageInsider.com’s Tim Lucas points out in this month’s lead feature, low interest rates aren’t the only reason why homeowners may want to refinance. Lucas offers five tips for capturing more refi business even in today’s purchase-centric market, and the potential value of his insights is hard to ignore. Read his article on Page 27.

Whatever the focus of your origination business may be, Scotsman Guide is here to keep you in the loop. As always, we hope you enjoy this issue’s features and articles, and we hope that you’ll check us out online, as well, particularly our recently launched news platform, Scotsman Guide News, at ScotsmanGuide.com/News. Till next month.


 

Raymond Fleischmann was editor of Scotsman Guide's Residential Edition. For questions about this article, call (800) 297-6061 or e-mail articles@scotsmanguide.com.

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