Greater Seattle Area: One of the Top 10 Foreclosures Affected Areas

The greater Seattle real estate area is counted among the top 10 foreclosure hit areas of the nation. It is the ninth position holder in its volume of troubled and distressed commercial properties. Nearly 85 properties have been marked as troubled properties in the area of Seattle. Six of the properties have been identified as distressed. This region trailed Las Vegas, New York, the District of Columbia, Los Angeles, Boston, San Francisco, South Florida, and Chicago. New York is the first position holder with $12 billion worth assets marked as distressed and troubled. The greater Seattle area has probably been taken among those top 10 foreclosures hit areas because its real estate investment market has always been leading due to a stable regional economy.

A few of the largest real estate developers of the country have demanded to include Treasury Secretary Henry Paulson in a $200 billion loan program that has been recently created by the government, which is known as Term Asset-Backed Securities Loan Facility. Paulson received a letter in late November that said that a large number of properties are facing the danger of foreclosure. It is envisioned by the industry that the investors will be able to get a credit facility that will help them in buying highly rated securities supported by commercial properties that are underwritten and appraised.

Real estate professional Jeffrey DeBoer said, “Banks do not want to originate loans unless they have some way to transfer those loans to new investors,” According to a Seattle developer named Doug Howe, the developers are less exposed in comparison to the investors in the real estate. He said, “It’s the property investors who got in trouble, not the real estate developers, who have been much more disciplined this cycle,” He further asserted, “There have been fundamental constraints with respect to financing speculative commercial real estate development. These constraints have been placed on the real estate development community by the banking and investment community”.

The people, who anticipated a good cash flow and an increasing property value, and bought homes between 2005 and 2007, are currently over-leveraged. The value of property has gone down due to foreclosure. The lenders, in all likelihood, won’t be ready to loan over 50 percent to 60 percent of the present value of the property. The regional banks will be facing a big problem next year when they will have to confront bad loans.

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