POSTED: 11:51 AM Wednesday, January 18, 2012 

In the New Orleans-Metairie-Kenner statistical area, foreclosures fell 9.37 percent to 7,089 filings from 7,822 in 2010, according to RealtyTrac, an Irvine, Calif.-based online marketplace for foreclosed properties.

The story was the same nationally, but RealtyTrac considers the 2011 dip a false lull.

This year, foreclosures are expected to come streaming through the pipeline again, the company says, in what it calls a “double peak.” While defaults won’t be as numerous as they were in 2009 or 2010, investors and real estate agents are being advised to brace for a boost in short sales, in which banks that hold foreclosed properties are willing to let them go for less than the mortgage’s value.

Jared Fousch, right, a Realtor with Mirambell Realty, shows an Old Metairie home to Hunter Estes. Fousch, who specializes in short sales, says banks are taking painstaking measures when reviewing sales of foreclosed properties. (photo by Frank Aymami)

The biggest surge in foreclosures is expected to come from the resolution of cases involving “robo-signing,” in which home loans were rapidly approved without a thorough vetting of the borrower’s ability to pay off the mortgage. Banks involved in the practice have been painstakingly reviewing these loans, and most in the industry feel they will net a significant portion of defaults.

In the meantime, banks have to deal with the foreclosed properties that are already in their asset portfolios as real estate-owned.

As of Sept. 30, Hancock Holding Co. had $123 million in foreclosed assets, according to company officials.

Sam Kendricks, Hancock’s chief credit officer, said that aside from listing the properties on its Whitney and Hancock websites, the bank is working with a network of Realtors throughout the Gulf Coast region to unload the properties.

“All of the money that’s invested in those properties is capital that’s not otherwise deployed in our loans,” he said. “We don’t make money in (REOs). It’s not a profit center for our company.”

Roughly half of the company’s REO properties are in Florida, Kendricks said, where it gained

“Unfortunately our company, as well as every financial institution in Florida, has more (REOs) than any state they operate in,” he said.

In the New Orleans area, the highest foreclosure rate has consistently been in St. Tammany Parish, which had 1,921 filings, down minimally from 1,946 in 2010.

There were 1,901 filings in Orleans Parish in 2011, a 22 percent decrease from 2,449 two years ago.
Fidelity Homestead Savings Bank has very few REO properties on its books, about $1 million worth.
The bank’s entire real estate loan portfolio totaled $404.9 million on Sept. 30, with $312.8 million in single-family residences.

CEO Alton McRee said he’s not expecting to see a significant rise this year.

“The amount that we do have is a manageable, small amount,” he said.

Fidelity’s strategy for ridding itself of the properties is by listing them with local real estate agents, McRee said.

Gulf Coast Bank and Trust’s holdings are also small, totaling less than $3 million, said president and CEO Guy Williams. The bank had $525.1 million in real estate loans as of Sept. 30. Loans on family residences accounted for $224.6 million.

Williams said he expects the bank to decrease its number of REO properties this year.

“The reason is we hold on to our own loans, so when those loans went bad we had our problems as community banks a year or two ago, and we’re at the downside of that slope,” he said.

Williams also said there is an appetite among bankers for short sales, given the right conditions.
“If they bring you a reasonable proposal to sell it and agree to pay most of the mortgage off, that can be pretty attractive,” Williams said.

Jared Fousch, a Realtor who bills himself as a short-sale specialist, said that process can sometimes be difficult.

Fousch said that before he can complete many short sales, banks will do several appraisals and the process can take up to six to eight months.

“Cautious isn’t even the word for it,” he said. “(Banks) spend so much money investigating each and every offer that goes through that they should just let it go through.”

Fousch, a former engineer, got into real estate investment in the boom years after Katrina. He was flipping properties with success in 2007 and 2008, but then a flood of renovations hit the New Orleans market. Competition with other investors made real estate speculation more difficult.

While New Orleans felt nowhere near the same impact as other parts of the United States, foreclosures began popping up and continue to do so, Fousch said.

“The most common situation seems to be job loss or pay cut,” Fousch said. “And every neighborhood has them.”