bubbleinfo.com

The category in the right column called ‘San Diego County REOs’ has been updated with the latest NOTS and REO lists.             >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

It looks like the properties that have been in foreclosure are getting pushed through the system, but that the new NODs have slowed to a trickle.

Here are the counts:

The week listed above is when my source includes them on their website, which is typically about a month after the actual trustee sales.

Here are a few of the REOs – look for them on the open market before long:

I think that, if there would have been other bidders for the Stagecoach Pass property, the amount would have been bid up higher. The original two loans totalling $1.475 million were originally funded by the same lender. The first mortgage was originally $1,179,200, so they’re the owner now, and I’d guess their new list price will be around $1.0 to $1.1 million. The former owners didn’t try to sell, so they may be enjoying a couple of more months of free rent before vacating.

Adding onto Ramsey Su’s comments on piggington – Here is the latest press release from Hope Now:

http://www.hopenow.com/upload/press_release/files/October%20Data%20Release%20.pdf

They are rambling on about how the government is preventing record foreclosures; 225,000 in October alone.  But when you look at their accompanying data, you see that they have been re-structuring payment plans at the tune of approximately 300,000+ per quarter since mid-2007, when we didn’t have much of a problem yet (foreclosures were half of what they are now). 

So take out the repayment plans, and compare only the modifications to the foreclosures.

The chart shows how the growth of foreclosures was skyrocketing, at least until California’s new law slowed the foreclosure machine in August.  We were on track to see close to 300,000 foreclosures nationally in 2008 3Q, and probably would have reached 350,000 foreclosures in 4Q08.

Instead, the government’s invention caused the lenders to stop foreclosing, and Hope Now is trying to make it look like their stellar work is solving everything. 

But now with Hank doing the flip-flop on buying distressed assets, the lenders should be giving loan modifications a brief cursory run and then quickly dropping the foreclosure hammer.  The whining borrowers should stop their moping and start packing their bags.

If you want to see another big reason why loan modifications aren’t going to save the real estate market, just read this article to get a sense of how borrowers feel ‘entitled’ to a better deal from their lender:

http://www.contracostatimes.com/business/ci_11075735

The stories:

Roy Risk, who owns a house in Solano County, said a recent offer from Wachovia was no deal at all.  Risk and his wife paid $921,000 in 2005 for a home, financing it with a $736,000 World Savings loan. Wachovia later inherited those loans. Their house is now worth $580,000, based on an appraisal in October.

Wachovia’s offer? A first mortgage of about $580,000, at a fixed rate of 5.4 percent, with a 30-year loan term. So far, so good. But Wachovia also insisted on a second loan of $175,000 — to cover the difference between the current value of the house and the loan balance of around $755,000.

The Risks discovered their new payments would increase by $500 a month.  “What’s going on here?” Risk said. “Are they going to help people or are they not?” 

Mark Gagliardi has sought for months to rework his loan with Countrywide on his Oakley home, but to no avail.

Gagliardi and his wife bought the house in 2006 for $768,500 and obtained two Countrywide loans totaling $691,000. Homes nearby now sell for $410,000 to $450,000.

“There is no way to refinance because there is no value left in the house,” Gagliardi said. “We are hanging on by the skin of our teeth. We admit our part in this. But Congress did its job. The president did his job. Now the banks are dragging their feet.”

Gagliardi wants a 30-year fixed-rate loan based on his home’s current value. He has gotten nowhere with Countrywide, despite placing many calls to the firm.

“Countrywide is not proactive,” Gagliardi said. “No calls, no follow-ups. When I call, I get put on ignore.”

Sue Chai Spaulding wants Bank of America to restructure a $250,000 equity line of credit on her Berkeley home. She got the loan to help buy a San Francisco house.

“They don’t want to help you,” Spaulding said. “But they shouldn’t take this so lightly. These are people’s lives. They have been rude to me.” She has retained a lawyer.

A new Community Reinvestment Coalition study found that foreclosure remains the most likely outcome for people whose homes are under water. Counseling agencies the coalition surveyed all said principal reductions are uncommon.

Oakley resident Rachelle Gonzales started a loan workout process in May with American Home Mortgage. In September, the lender rejected the deal.

“It’s so frustrating,” Gonzales said. “They say they’ll help. Then they say no. They have called me names. They have called me a slime. This has been awful. Just awful.” Her loan is now delinquent.

Karen Mims sought for more than a year to convince her lender, Aurora Loan Services, to modify the $509,000 loan on her Oakland home. The payments are too high.

“I have desperately tried to work things out,” Mims said.

Mims was told she would be helped. But Aurora rejected a new loan although Mims was on a payment plan. On Nov. 12, Aurora foreclosed on the loan. She remains in her house of 11 years.

“This is my home,” Mims said.

Yolanda Chatham of Antioch is baffled because Countrywide won’t help. Her problem? She pays her loan on time.

“They suggested I get one or two months behind in my payment,” Chatham said. “Their solution was to mess up my credit.”

Risk, of Solano County, urged lenders to become more flexible or face new woes.  “I’m ready to let (Wachovia) have the house,” Risk said. “See if they can get $580,000 for it.”

He says it’s frustrating to see those he believes created the crisis receive help while he and his wife are ignored by lenders.

“They better be careful because those of us at the back of the line just might create the new foreclosure crisis,” Risk said.

from marketwatch.com

LADERA RANCH, CA, Nov 24, 2008 (MARKET WIRE via COMTEX) — G8 Capital announces today that it has closed its 10th portfolio acquisition from a top-five U.S. financial institution. The portfolio consisted of 88 California REO properties. G8 Capital helps financial institutions and other holders of REO assets or non-performing loans get fair value for their assets through very quick closings.

G8 Capital expects to close two more REO portfolio acquisitions before the end of the year, putting the firm on track to acquire more than $150 million in portfolio acquisitions over the past 12 months. The firm has acquired portfolios from some of the nation’s largest financial institutions and investment banks, as well as smaller regional/community banks. G8 Capital anticipates acquiring more than $500 million in REO and non-performing loan portfolios next year.

G8 Capital has seen a substantial increase in seller activity following Treasury Secretary Henry Paulsen’s announcement to abandon the Troubled Assets Relief Program (TARP) program to purchase distressed assets.

“Activity from sellers has increased more than threefold following the Treasury’s announcement last week, with many sellers expressing a desire to close transactions before year end,” said Daryl Schwartz, Vice President of Acquisitions for G8 Capital.

This would be the week to blitz REO listings with offers!

Welcome to the day after Thanksgiving!

A reader sent in this report from Goldman Sachs – it refers primarily to the subprime loans issued in 2006 ($600 billion):

ABX Performance Update
·       Delinquencies and losses – delinquencies increase again this month for all ABX indices, although there are further signs of moderation for the 06 indices. Losses continue to rise, due to liquidations from the bulging foreclosure and REO pipelines.

Recent Trends in the Non-Agency Mortgage Market*
·       Loan modifications on the rise
·       Modification activity is steadily on the rise at about $5B per month, $4B of which are subprime loans. So far, about $35B subprime loans have been modified, accounting for 6% of the outstanding balance.

1       To date most modifications have taken the form of a rate reduction. While only 27bps of outstanding subprime mortgages have received principal reduction, it is often very significant, typically providing 20-30% equity relief to the borrowers.

2       Principal modifications appear more effective than rate reductions in keeping borrowers perform.
3       Modifications are least effective for subprime borrowers, 70% of whom relapse into delinquency within 12 months after modification. Alt-A and Option ARM borrowers perform relatively stable, with a 20% delinquency rate (D30+ ) after modification.

·       Liquidation trends – how much discount do you get from distressed home sales?
·       REO properties offer roughly a 25% discount below the market prices implied by the Case-Shiller HPI index, while short sales prices are only about 8% lower.

1       Liquidation discounts vary greatly by states. Distressed sale in Ohio is about 50% lower than market price. For California, the discount is less than 20%.

*: all based on Loan Performance data, for non-agency securitized mortgages only.

My thoughts:

When they say 27bps, they mean 0.27% of the $600 billion, or about $1.62 billion in loans that have had a principal reduction.  That’s about 4,000 loans at an average of $400,000 each.  These are national stats, yet 4,000 loans probably doesn’t even cover the amount of subprime loans funded in SD County in 2006, let alone the nation.  Yet in their #2 they note that the principal reductions appear to be more effective in keeping borrowers paying.  In their #3 they note that 70% of those subprime borrowers who only get a rate reduction end up non-performing within 12 months.  Which really means a lot less than 12 months, because they have to be counting loan mods completed in 2008.

End Result?  The principal reductions are the only effective way to modify a subprime loan, and for the mortgage industry to fully engage, the government is going to be under pressure to share the pain.  Hence, the $600 billion gift issued by the Fed right before the holiday.

REOs vs. Short Sales – They assert that REOs are selling at 25% discounts, and with a short sale you only get 8% off.  I think that in 2009 we’re going to see more agents listing their short sales with the dramatic way-below-market list price.  With the agonizing long wait to complete a short sale, the ultra-low list price is becoming the trend to entice buyers to hang around, but over that time there are more offers that keep coming in to thwart any potential “below-market” sales price.  I’d expect that from now buyers are going to want to have less and less to do with short sales, which could lower their eventual sales prices.

May your stuffing be tasty
May your turkey plump,
May your potatoes and gravy
Have never a lump.
May your yams be delicious
And your pies take the prize,
And may your Thanksgiving dinner
Stay off your thighs!

Happy Thanksgiving Everyone!

from sddt.com

Five ships and more than 5,500 sailors of Carrier Strike Group 7 returned to their homeport of San Diego Nov. 25 after a six-month deployment to the 7th Fleet and 5th Fleet areas of responsibility.

The strike group flagship, the Nimitz-class nuclear aircraft carrier USS Ronald Reagan, the guided-missile cruiser USS Chancellorsville, the guided-missile destroyers USS Decatur and USS Gridley and the guided-missile frigate USS Thach arrived to meet thousands of family members waiting on the pier.

The deployment was the third-ever for the Ronald Reagan strike group, which performed combat operations in support of coalition troops in Afghanistan, as well as carrying out a humanitarian assistance/disaster relief mission in the Philippines in response to Typhoon Fengshen in June and July.

“There is no question that Ronald Reagan Carrier Strike Group had a very successful deployment,” said Commander, Carrier Strike Group 7, Rear Adm. Scott Hebner.

“The talented and dedicated sailors of this group demonstrated tremendous operational flexibility and performed at the highest levels of excellence across the warfare spectrum and core capabilities of the Maritime Strategy.

U.S. Navy photo by Mass Communication Specialist 3rd Class David A. Brandenburg/Released

“They were warriors, ambassadors, partners and humanitarians. They represent all that is good in our country and I’m profoundly honored to sail with this impressive strike group.”

The deployment ceased being routine when Mother Nature unleashed its wrath on the Philippines. Typhoon Fengshen struck the nation hard, particularly on the island of Panay, leaving 540 dead and destroying more than 100,000 homes.

The Ronald Reagan strike group, which was enjoying its first port call of the deployment in Hong Kong, left port a day early to avoid the storm, and after receiving an order from President George W. Bush, immediately steamed to the Philippines to help.

Arriving on station in only 36 hours, helicopters from all six ships, including the guided-missile destroyer USS Howard, proceeded to fly eight consecutive days delivering more than 519,000 pounds of fresh water, rice and medical supplies.

After visits to Korea, Japan and Malaysia, the Ronald Reagan strike group transferred to 5th Fleet.  Ronald Reagan, Chancellorsville and Reagan’s embarked Carrier Air Wing 14 took up station in the Gulf of Oman as Commander, Task Force 50 and immediately began support of coalition forces on the ground in southern Afghanistan, flying more than 1,150 sorties in support of Operation Enduring Freedom.

While Ronald Reagan and its air wing helped provide security on the ground in Afghanistan, other strike group ships provided maritime security in the region.  Decatur and Thach joined Task Force 152 in the Central Arabian Gulf, while Gridley and Howard patrolled the Arabian Sea and Gulf of Aden as part of Task Force 150.  CSG-7 ships also strengthened maritime partnerships by participating in the bilateral Exercise Malabar ‘08 with the Navy of India, as well as South East Asia Cooperation Against Terrorism with the navies of Brunei, Singapore and the Republic of the Philippines.

The deployment was the third for Ronald Reagan, the U.S. Navy’s newest and largest aircraft carrier, which was commissioned in 2003.  The squadrons of CVW-14 supported many missions during the six month deployment and include the “Redcocks” of VFA-22, “Fist of the Fleet” of VFA-25, “Stingers” of VFA-113, “Eagles” of VFA-115, “Black Eagles” of Airborne Early Warning Squadron 113, “Cougars” of Tactical Electronic Warfare Squadron 139, “Black Knights” of Helicopter Anti-Submarine Squadron 4 and the “Providers” of Carrier Logistics Support 30.

www.battle-fleet.com/pw/his/USS_Ronald_Reagan.htm

There are 144,000 Americans stationed in Iraq, and over 48,000 in Afghanistan.  While we enjoy the freedom their service provides us, they are being put to the test in every conceivable way.

Let’s reach out, shall we?

I introduced ‘Aunt Nancy’ last year, a lady who out of the goodness of her heart has organized an effort to send packages to soldiers around the holidays.  By simply emailing her, she will assign you a specific soldier, and you can send them a ‘relief package’ to enjoy for the holidays.

Here is her message:

Jim,

Thanks for your offer to help spread the word for my last minute plea for getting Christmas to our troops!  As you know, I’ve been at this for over 5 years now.  There is no organization here, just me and my laptop, connecting people  to our troops in Iraq, Afghanistan, Germany (wounded military), and now even a few sailors out at sea.

Your blog readers know what a lean year it has been for everyone, and our troops are feeling it too.  Their families are struggling to be able to send much, and well, my little project has had about a 75% drop in participation this holiday season.   If anyone would like to help by filling up and mailing a Christmas stocking or two, that would be awesome!  We are also looking for candy canes, cookies, candy, and decorations.  Even just more Christmas card greetings would add some cheer!

Usually packages need to be shipped by Thanksgiving, and that surprises people.  Fortunately, I just received two Army units stationed right at the Baghdad International Airport bases and that is where the mail arrives.  They can get PRIORITY MAIL delivered in 10 to 14 days!  That gives us a chance to still mail decorations in time for them to hang them up and enjoy them for a week.

In any case, even a couple of extra cards would be nice.  Some people bring a box of cards to Thanksgiving dinner and have all the family sign them.  Scout and school groups often make cards.  Whatever!  A note here, there continues to be an email forwarded around saying “send a card to ANY SOLDIER” etc.  Please let people know that those cards get thrown away.  They must be addressed to a specific soldier.  I can help with that!

My blog has several postings about the different projects I’m organizing.  No troop addresses are ever listed online.  Just send me an email request!  Thanks again for your effort Jim.

Nancy’s email is  nancy@auntnancyusa.com

and her blog is http://auntnancyusa.blogspot.com/

Email Nancy today, and she’ll give you a soldier’s name and address for you to send a holiday treat!  Thank You!

I know I’m beating a dead horse with this constant coverage on loan modifications, but with the foreclosure train at a standstill, the 2009 market will hinge on how successful the loan mods will be over the next 2-3 months.

cnbc.com’s Jane Wells took a tour of Countrywide’s loan mod facility in Simi Valley:

http://www.cnbc.com/id/27907758

Some of the excerpts:

I watched one of them in action. Tammy Tipton was on the phone with a man in trouble with both his first and second mortgages. Adding to the problems, both mortgages are owned by different outside investors (85 percent of the loans Countrywide services are not owned by Countrywide but by someone else who must approve any modification). “I’m going to be taking this to the investor, and I’m going to be requesting a step plan,” Tipton tells the man over the phone. The step plan will lower the interest rate on his first mortgage to 4.375 percent for the first year, gradually increasing it to 6.375 in the third year, where it will remain fixed. As for the second mortgage, well, she’ll try to see if the investor will budge. “I don’t wanna get your hopes up regarding the second, but I’m definitely going to give it a shot,” she says.

Resolving the second-mortgage issue is where the loan-mods will live or die.  Even though the second-loan holders have no leg to stand on, unless they willingly give up, the success of loan mods will be challenged, to say the least.

Some interesting facts Steve Bailey gave me: In 2004, three out of four people going into foreclosure could sell their way out of the problem. In 2008, only one out of a hundred is able to do sell the home for enough to pay off the mortgage. Sixty-one percent of those who stop paying their mortgages do so due to “significant loss of income,” while only 3.3 percent of foreclosures are due to ballooning mortgage payments.

I asked Bailey if some people have stopped paying their mortgages intentionally–even though they have the wherewithal to stay current–just to cut a deal with Countrywide. “I think we’re more worried about it than we’ve actually seen it,” he says. But one thing Bailey is noticing is new maneuvering by some people seeking a short sale. “This is a market that absolutely invites people to try to game the system,” he says. This next video clip is Bailey giving a unique perspective.

The second video in the article is an instant classic.  She asked how many people are getting away with gaming the system, and pulling off a fraudulent short sale, and he said, “How often people achieve it is very low, how often they try it is more than that.”

Finally, Bailey says it’s hard to come up with a solution when a homeowner doesn’t want to stay in the home. Seven percent of those in trouble with their mortgages don’t want to be saved–they just want out. Maybe they’ve gotten divorced, or don’t like the neighborhood. But most people do want to stay, and it’s up to Bailey’s employees to see if they can come up with a plan.

Seven percent sounds very low, doesn’t it?

Kelly at the www.voiceofsandiego.org is following the trials and tribulations of a guy recently transferred here from Denver.  His wife and kids are living with her mother in the O.C. while he works in San Diego and lives on his boat.  They are looking to buy a house in Carlsbad, Rancho Bernardo, or La Mesa around $500,000.  His story begins with these four passages below – very similar to what many buyers are going through these days:

1. http://www.voiceofsandiego.org/articles/2008/11/17/survival/402cleveland111208.txt

2. http://www.voiceofsandiego.org/articles/2008/11/24/survival/399househunt111708.txt

3. http://www.voiceofsandiego.org/articles/2008/11/24/survival/390cleveland112408.txt

4. http://voiceofsandiego.org/articles/2008/11/25/survival/389david112408.txt

I got a mention in the last segment only because Kelly has been checking in with me to verify how the story measures up to what I’ve been seeing, and I’ve told her – very typical.  I have buyers who have been looking for 9-12 months, with nothing to show for it except a good education on how crazy the real estate market is.

Buyers are energized by having outstanding internet access to the inventory, and it seems like the search would be pretty simple – just keep an eye out for the good ones!

But there are so many buyers doing the same thing that there are multiple offers are virtually every good buy that hits the market – rarely does one slip through.

It reminds me of the conversation I had earlier today.  Because of the instant feedback from the marketplace, you would think sellers and their agents would recognize when their price is wrong too. 

A client had made an offer last week that was 5% under the bottom of a value-range price, and we received no response.  Today I caught the agent answering the phone, and when told about no counter, I suggested, “You’d think after six months on the market the sellers would recognize that something was wrong with their price”.

She said, deadpan and without emotion, “They think it should be higher”.

Today’s buyers are in full recognition of market conditions, yet sellers rarely have a clue.