Forclosures on the Outer Banks affects all of us

I was asked to speak today at the Outer Banks Association of Realtors Property Managment monthly meeting about the state of foreclosures on the Outer Banks.

The property management folks are the ones that deal with the property owners, renters and headaches.  They are a good group of people and I get the sense they are truly looking out for the best interest of the owner.  The concern is two fold - how do they protect the customer (this was the primary focus of the meeting) and how do they protect themselves. 

When a family rents a home on the Outer Banks, a deposit is required to reserve the cottage and the balance is due typically 30 days before arrival. 

The problem is pretty complicated.  An owner signs their property with a company to rent to vacationers.  The rental company spends money on promoting the home to the public.  Owner start having trouble making mortgage payments and the property goes into default.  All the while - the rental company continues to collect deposits on summer rentals and sends a share of the proceeds to the owner.  The home goes into foreclosure and is sold on the Dare County Courthouse steps.  The renter has given a large deposit, the owner has the renters money (and not the home) and the rental company has the obligation to serve the customer.  The banks that typically are purchasing the property won't honor the rental contracts - their goal is to sell the property as soon as possilbe - they don't want to get into the rental business.  Who is responsible for the loss?  Can you get the money back from the owner?  They are going through a foreclosure so things are probably not too rosy at home.  In most cases, the rental companies will have to absorb the cost in the short term and that expense will be passed on to the consumer - the vacation renter in the long run.

If you are an owner that needs to re-structure your debt, contact your lender to see if they are willing to help.  If you would like to look at additional options or a second opinion, please feel free to contact me at your convenience.

The silver lining - the rental market looks very strong this year.  Most felt that 2008 will be the best year yet for rentals on the Outer Banks.  Hopefully this influx of cash will help eliminate the foreclosure process for those in trouble.   

Comments

[bobxnc]

Ronnie,
Nice piece. are you seeing more rental or permanent homes in foreclosure locally. If the rental market is strong you might expect to see permanent homes but we heard so much about aggressive financing plans on rental property that I expect the problem may be more pronounced there.

[Ronnie Roach]

Bob,

If I had to guess on the numbers - 50% local homeowners and 50% vacation homes or investment properties. It seems that we are starting to see an increase in the total numbers of filings.