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Crisis In The Housing Market
Foreclosure Clogs, More Headaches For Local Agency
LIANE HANSEN, host:
This is WEEKEND EDITION from NPR News. I'm Liane Hansen.
A national freeze on home foreclosures and concerns about paperwork irregularities are adding insult to injury for real estate agents. Many have had to relearn their business to survive a housing market that's become unpredictable. Now there's fears that more deals could fall through, as lenders freeze transactions and states investigate banks for potential fraud.
Reporter Bellamy Pailthorp of member station KPLU in Seattle visited a real estate agency that's weathering the foreclosure flap.
BELLAMY PAILTHORP: At Pickett Street Properties, down the hall from a plush reception area, brokers are crammed into two small offices. Realtor Jesse Moore says nearly half of the properties Pickett Street handles are distressed.
Mr. JESSE MOORE (Realtor, Pickett Street Properties): My role has become less fun, more emotional. I've become more of a counselor than a real estate agent.
PAILTHORP: At the moment, all of Moore's listings are bank-involved. Either they're short-sales or he's selling houses that have already gone through foreclosure and are owned by banks.
Mr. MOORE: And with the news that came out in the last few days and over the past week, with the suspensions of the foreclosure process, it definitely puts more mystery in this than I would hope for.
PAILTHORP: He says it's difficult for him to talk about this very openly. He's worried anything he says will scare away potential buyers, when there are still plenty of great deals to be had. And so far, he says nothing in his office has actually fallen through. But he is seeing the effects of the freeze.
Mr. MOORE: So this is an example. This is a box, these are BPOs that I have done in the last two months.
PAILTHORP: BPOs are broker price opinions on distressed properties. They're commissioned by banks that are at some stage in the foreclosure process. Moore says prior to the news breaking about Bank of America and other major lenders suspending their foreclosures, he was getting 10 to 15 BPO requests a day.
Mr. MOORE: This week so far - and it's Thursday - I have one request.
PAILTHORP: One of his partners, in the office next door, specializes in auctions. John McCants buys foreclosed homes on the courthouse steps every Friday. He says normally, there'd be about 150 foreclosures out there. Right now, there are half that and he's considering only a handful as potential investments.
Mr. JOHN MCCANTS (Realtor, Pickett Street Properties): And it comes down to today, you know, I've got three or four houses because of this, you know, news that came out in the last week or so.
Ms. JILLAYNE SCHLICKE (Executive Director, National Association of Mortgage Fiduciaries/CEO, CE Forward, Inc.): I know it sounds kind of cruel to say let's get going with these foreclosures. But really, stopping the foreclosures is not going to be very healthy for our housing market.
PAILTHORP: Jillayne Schlicke teaches mortgage lending law in the Puget Sound region. She says the vast majority of people who have ended up in foreclosure aren't going to get to keep their houses because of mistakes in their documents.
Mr. RICHARD HAGAR (Real Estate Appraiser): Massive lawsuits - there's no question about this.
PAILTHORP: Seattle real estate appraiser Richard Hagar says he's already getting calls from law firms looking for expert testimony. And it's not so much about helping people stay in their homes. It's about getting the banks to compensate those who've already lost them.
Mr. HAGAR: And while they will likely not get their homes back, there is probably a very good chance that they will be able to receive damages. And these damages may reach into the billions. It could be massive.
PAILTHORP: Back at Pickett Street Properties, realtor Jesse Moore says he knows the processes at big banks need to be cleaned up. But he's hoping they don't take too long.
Mr. MOORE: If you examine this process too closely, and give people and give homeowners the perception that I can stop paying on my home and the bank can't take it back, that's dangerous.
PAILTHORP: He says they already have a squatter in one of their properties. And if you think selling a foreclosed house is difficult, try getting out from under a mansion with a family of unlawful tenants.
For NPR News, I'm Bellamy Pailthorp in Seattle. Transcript provided by NPR, Copyright National Public Radio.