Elaine Alfiero begins most of her days before dawn in a real estate office near the Virginia Beach Oceanfront. She scrolls through hundreds of e-mails and listens to dozens of phone messages. She's sold foreclosed homes for banks and other lenders for 23 years, but she has never been busier. Seventy-five-hour work weeks are the norm, lunches a luxury.
"It's hard to keep up," said Alfiero, who runs the local Long & Foster Real Estate department that sells foreclosed homes.
The sour housing market has slowed the economy to a standstill, but those in foreclosure-related businesses, from sales agents to construction contractors, attorneys to the real estate units of banks, are working overtime to handle the demand.
Foreclosure-related notices in the region are 2-1/2 times what they were a year ago, according to RealtyTrac, an online foreclosure-monitoring service based in Irvine, Calif. In December, one in every 513 homes in Hampton Roads had a foreclosure-related filing.
"I don't think this is going to end for a while," Alfiero said. "Anybody who's bought in the past two years is likely upside down. They bought at the height of the market. Now that the market is down, the buyers aren't out there to support the prices they were."
Long & Foster's local office is handling four times as much business as in previous years, and Alfiero's staff of 15 is stretched thin. Hiring could alleviate the strain, but training an agent to be a foreclosure specialist takes months, maybe even a year, she said, and she has no time for that.
Just four years ago, Charlene Howard, an agent who works for Alfiero, handled no more than one or two foreclosures a month.
"Right now I have about 30 houses listed, and another 18 in the pipeline," she said. "I don't think I could handle more than a few extra before hitting my breaking point. It is physically and mentally overwhelming."
The moratorium on foreclosures that some banks and lenders imposed in recent months has been a blessing, Howard said.
"Some days I throw my hands up and say 'I'm done,' " she said. "But the next morning I get up and I'm ready to do it again."
When a homeowner fails to make a mortgage payment, lenders issue a notice of default. If the home loan continues to go unpaid, the next stage in the process is the trustee sale, in which the bank forces a sale of the property at a public auction.
In years past, many homes never made it to the third stage, in which the bank takes ownership of the property. Investors typically bought them at the auction.
"Now, very few of the investors who show up to the auctions are willing to buy," said Michael A. Glasser, a Norfolk attorney whose firm handles foreclosure auctions for banks. "It's very possible you'll see the trustee there and no one else."
As a result, banks and other mortgage lenders are saddled with many more properties and must expand - and in some cases create - real estate departments, said Andrew Lock, chief credit officer at Monarch Bank, a small Chesapeake-based lender.
Monarch hasn't had to foreclose on many homes, and those it has taken it tries to sell quickly, Lock said. "We're in the business of minimizing our loss and getting it off our books," he said.
Larger lenders own far more homes in Hampton Roads. For example, Fannie Mae, a major buyer of mortgages from original lenders, owns more than 120 properties in the region.
In this market, once a lender takes a home, it's likely to hold it for a while. After being listed for sale, a house could remain unsold for months.
"I've had properties on the market for as long as two years because clients don't want to lower prices," Alfiero said.
Banks usually want to sell a property for the going price in a neighborhood, she said. And few are willing to advertise the property as a foreclosure, fearing a slew of offers from potential buyers looking for a steal.
"Opinion is divided on that," Lock said. "Some banks say that if they advertise it as bank-owned, people will move on it quicker. Other banks think that if they advertise it as bank-owned, people are just going to low ball them."
Lately, lenders have been taking steps to avoid foreclosures, Glasser said.
Last week, for example, Countrywide Financial Corp., now a unit of Bank of America, expanded a program to Virginia that offers to reduce interest rates, convert adjustable-rate loans to fixed rates, reduce the principal owed and waive late fees for qualifying borrowers.
"The reason is not purely altruistic," Glasser said. "The prices of real estate keep dropping each month. That means the collateral to the lender is shrinking, and the ability of the borrower to pay is falling."
Lenders simply don't want to be stuck with assets that are falling in value.
In South Hampton Roads, the median price of existing homes was $204,000 in December, down 7.3 percent from a year ago, according to Real Estate Information Network Inc., the local multiple listing service. The median is the point at which half the prices are higher and half are lower.
"More or less everyone is in the same boat," Glasser said. "We're working with the lenders and the borrowers to the extent possible to help them keep their home."
Foreclosure specialists such as those on Alfiero's staff are usually the first on the scene when a home goes into foreclosure. The agents visit the house to see whether it's vacant, evaluate the condition and determine how much it could sell for in the current market.
Most homes that come through her office need some sort of work, such as a coat of paint or new carpet and flooring. Some need much more.
"I've walked into houses where I could see the earth and the sky," she said.
The need for renovation and maintenance has meant a boon for Jeff Hunter, a general contractor based in Virginia Beach.
"It's just crazy right now," said Hunter, who has been renovating foreclosed properties in Hampton Roads for more than 20 years. "Everybody is a month behind on jobs."
Typically during the winter months, work slows for Hunter; this year, however, he worked New Year's Day to try to catch up.
"Even really nice houses have something that needs to be done to them," he said.
Safeguard Properties, a Brooklyn Heights, Ohio-based company that maintains foreclosed properties across the country for banks and other lenders, performed 1,000 home inspections in Hampton Roads in November, and hundreds more last month, said Alan Jaffa, the company's chief operating officer. That's twice as many inspections as a year ago, he said.
"All of our predictions for 2008 went right through the roof. I don't see that ending in 2009," Jaffa said.
Alfiero and her team also are bracing for the months ahead. But she's got experience handling stressful situations.
On her first visit to a foreclosed house years ago, Alfiero was greeted by a woman pointing a rifle at her stomach.
"You never know what you're going to find when you get there," said Alfiero, who told the woman she was just there to see the property and left quickly. "Nothing surprises me these days."
Josh Brown, (757) 446-2318, josh.brown@pilotonline.com
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Always ignore the experts
It's a new paradigm, and everybody who doesn't buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.
Renters, and anybody born in a future generation, will not be able to afford a $15,000,000 starter home in 15 years. They will live in tent cities, and Hondas.
This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent.
(Not my work, whoever wrote it was ahead of the bubble blogs even).
Keep Buying
Just ignore what the "Experts" say.
Real Estate is local. Virginia Beach is different from the rest of the country. We have very sound fundamentals. Real estate prices are just going to go up and you will be sorry if you do not buy now.
A bubble that had to burst
Any time you see as much inflation of pricing as we saw in the housing market, it has to be considered as a dangerous bubble, and one that has to burst. Anytime one of these financial bubbles burst, people are going to get hurt. The dotcom bubble comes to mind. Many people lost a lot of money on that mess too. So you bet the foreclosure people are going to do well for a time. Once prices drop to where they should be, homes will sell again and the real estate market will recover. It is just a matter of time. In the meantime though, people are going to get hurt in the situation.
These are the same real estate agents
that sold all these homes with groundless promises of double-digit returns, who hooked up buyers with brokers that could get them into all kinds of loans they couldn't afford, and who received commission checks for doing almost nothing. The real estate agents were just as bad as all the other "sharks" circling.
No EvanJ, that figure is the
No EvanJ, that figure is the # of homes that are _in_ foreclosure. Not pre-foreclosure. Because there are so many people behind, many lenders just ignore the lack of income. Perhaps they don't want to report the losses to shareholders. Losses mean no bonus, hide them losses for as long as possible. I know local people that are behind $10,000+ and aren't in foreclosure. There are people who have lived payment free for over a year, and the lender hasn't had a chance to "catch up" to the fact that the income hasn't arrived (this is fairly common in Florida). If you've got steady employment, a down payment, please by all means jump in and catch a knife. We need people to buy them all the way down so we can mark to market the prices.
I'm glad...
I for one am very happy The Pilot has continued to expose the crooks in the real estate industry (stories last week exposing crooked appraisers, earlier agents and mortgage bankers, the blight guy, etc)....then writes about how their actions affected Hampton Roads (misleading homeowners ....now reporting the aftermath). Lets not jab the Pilot about money making stories,,,esp. in this case....they could make more money from real estate agency advertising ...telling stories about the market picking up etc. Thanks Pilot!-I'd love to see you go after the mortgage bankers next :)
Good way to put it
...in the area are paying their mortgage just fine and with no problem, right? So, 1,024 of 1,026 are taking care of business right now
That's a good way to put it. You notice they also don't quote it as 0.19% because that wouldn't be very scary either. I wonder what the effect is on the economy of negative spin news reporting.
NCguy
Oh, well of course. The media must have pain, suffering, poverty, destitution, raunchy sex, lies, corruption.... I mean, if not.. then they might have to report good news. Good news gets no ratings, and no entertainment value. So, we certainly can't have any of that now, can we?
can u say "bubble"?
According to OFHEO reports (the Federal housing agency who oversees on Fannie Mae & Freddie Mac)over the 5 year span from I believe it was 2002 thru 2006, the VA Beach/Norfolk MSA experienced the 3rd highest home price escalation in the entire Nation. Only the glam cities of Honolulu and Miami outstripped this area in skyrocketing home prices. Incomes here have never risen enough to warrant the bubble-prices. The impact of the increased Pay & Housing Allowances given to military stationed here in the early years of the local bubble is no longer in effect. Those military who bought homes here & Sold & transferred out by 2006 made some money. But anybody who bought here from 2006 onward is out of luck. Inventory is skyhigh, & so is shadow inventory (REO's the banks won't list on the MLS-- because the banks don't want to bust their own comps for all the other homes in a given area, so they just "hold" many homes til the market improves)-- anybody else notice how rents are dropping? Those are REO's being rented out--
Is it me,
or did anyone else get the impression that the Pilot was almost giddy that so many people are hurting? I was only able to read about a 1/4 of this story before I could not go any further.
I've read that in other
I've read that in other markets many of the foreclosure sales are going to small time investors who are still trying to flip them. Fix them up a little, toss em on the market. Since prices still haven't reverted enough in Hampton Roads, it seems likely to me that anyone who buys a foreclosure and doesn't get it 40-50% off is likely to end up underwater unless they put down a hefty down payment. I've looked at some of these REO listings and I wasn't impressed. Offer should be 50% of listed price.
Wow, if I read the paper,
Wow, if I read the paper, I'm going to think times are really bad. Meanwhile here in Norfolk people I know in the lowest income brackets have late model cars with chrome wheels, and drive them home to heated homes with color televisions. It's a little ironic.
more foreclosure work
See?........ The Bush economy has made more work opportunities available for some careers.
Unemployment offices are bustling as well, thanks to the Bush economy.
The new Prez (whether it turned out to be Obama or McCain) is inheriting a ball of wax.
TAXES
Overly high property assessments, add to foreclosures.
Lets see how long they are left higher than they should be.
Do banks and mortgage companies pay property taxes on foreclosed properties? Do they get a pass or a sweetheart rate?
Or , is it just the little guy that gets shafted?
.
So, 512 of 513 homes....
...in the area are paying their mortgage just fine and with no problem, right? So, 1,024 of 1,026 are taking care of business right now....let's not freak out people. Most of the home owners are paying their mortgage as planned and will continue to.. let's do forget that!
The Banks
I just have to say, the people who BIG banks do not care one bit about other people. They have been ripping off other people for years and I am glad they are suffering.
At the same time if you can't pay back the money, DON'T BORROW IT! It is funny how when people borrow money and don't pay it back, nothing happens to them. However, if someone robs a bank, they are sent to prison for years. What is the difference???
Exactly right
This is the natural process, that would occur, with or without the worthless bailout. The banks are going to try to hold the line at the highest price, investors are not going to make a move because they know the price eventually must come down. In the end, the people who will make out, are people who always wanted a home, but could never afford one before this bust. Lender and investors may not be happy about it, but they are going to lose in the end. And, if the Government would have kept its meddling hands out of the process, this festering sore would be healing already. All that $700B did, was create the very situation outlined in this story. An open wound that can't heal right now.
Fixing it !!
Fixing it up for what? So it can sit on the market longer???