Folks have been wondering about what details could be culled from the foreclosure list. We’ll give the benefit of the doubt and omit those on the NOD list – they might be able to save themselves, or get a loan mod.
Let’s just look at the 100 SFRs valued between $685,000 and $1,250,000 in Carlsbad, 92009 and 92011 that have received their notice of trustee sale, or have met their fate on the steps of the county court house:
What’s the mix of Defaulted Purchase Loans vs. Refinances? If you refi’d your way into trouble, and wound up over-encumbered, that’s one thing. How many people either never saw the downturn coming, or or were hit by a hardship after purchasing?
| Purchase Loans | Refinance Loans |
How Many were Neg-ams? Tabulated by counting those who must have only made the minimum payment, and whose loan balance increased substantially, as noted on the NOTS. The cutoff was simple – if the amount on the notice of trustee sale was more than 10%, it was called a neg-am:
| Neg-Am/Option ARMs | No-Neg Loans |
Conservative vs. Riskier? Breakdown of above – How did folks use the neg-am loan as an affordability product?
| Purch No-Neg | Refi No-Neg | Purch Neg-Ams | Refi Neg-Ams |
Skin vs. No Skin in Game? How many used at least a 10% down payment when they purchased?
| At Least 10% Down Pmt | Less Than 10% Down |
What Year was the Mortgage Originated? How long are people able/willing to endure?
| 0-2003 | 2004 | 2005 | 2006 | 2007 | 2008 |
How Quick are Banks Processing? How many months have gone, or went by since the first notice of trustee sale was recorded?
| 1 mo | 2 mo | 3 mo | 4 mo | 5 mo | 6 mo | 7+ mo |
Auction List/Bank-Owned/3rd Party?
| Auction List | Bank-Owneds | Sold to Third Parties |
Trying to Sell? Five of the REOs just closed, and the other is pending (there are no active REO listings currently). The 3rd parties jump right on it, of the four: two are ACT, one PEND, and one SOLD:
| Auction List on the MLS | REOs on the MLS | 3rd Parties on the MLS |
Shadow Inventory? The reverse of above. Once a property gets on the auction list, how much chance is there that they’ll be saved? If not saved, how many properties on the list are heading for market?
| Auction List/REOs/3rd Party Properties Not on MLS |
The 75 properties will probably roll onto the open market spread over the next 2-4 months, and get plenty of attention. The REOs that have already sold closed for $99,000 over list, $91,000 over list, $20,000 over list, list price, and $10,000 under list price.
Will the short-term market get overwhelmed with REOs and short sales, or just get dripped to death? Either way, I think there will be buyers – it’s just a matter of price!
Excellent breakdown. Thanks!
I dig the analysis, thanks!
And help me understand the inital sample of 100 – some of the initial 100 have chaged title by completing the foreclosure process “met their fate on the courthouse steps” and some are still awaiting trustee sale, yes?
So even though some have not completed foreclosure they are all getting marketed in some way (they are on an auction list). I did not know properties were put for sale before they are sellable… if I understand correctly.
How many of the 100 have transferred title at trustee sale and could actually be sold today? This would help me understand the “trying to sell” and “shadow inventory” analysis.
Very cool, thanks for your work on this!
Skeet
Looks like all the californians are heading est my friends:
http://www.latimes.com/business/la-fi-texas7-2009nov07,0,652942.story
Are there many properties coming up in 92009 that are under the 685K value?
koolaid, the costs of living are so low in the gulf because hurricanes periodically sweep through and wipe everything out. 😉
Low cost of living? yes
Can you get flood insurance? good luck with that
Art–Don’t forget the 2.5%+ property taxes. Oh yea, and our property manager in Dallas reports his home electric bills in the Summer are in the $700+ range.
Jinx, are you giving up on 92024? Even if you exclude Village Park there are some homes for sale <$700K.
Jim,
There’s an excellent study recently done by the Federal Reserve Bank of Richmond comparing the default rates on residential mortgage recourse loans vs. non-recourse loans nationally.
No surprise how it came out. The possibility of a deficiency judgment does have quite an effect on borrower “choices.”
3 clicks, no, I’m not giving up on Encinitas 🙂 but I’m not excluding Carlsbad either. It’s just that Jim’s review covers properties over 685K and that’s above my range. The pickings under 600k are pretty slim these days, just wondering if there is more in the pipeline.
JTR,
Been reading your site for months now. Not entirely sure whether you are a bear or a bull for real estate. But you seem to paint a fairly realistic picture.
You say the 75 properties will probably roll out over the next 2-4 months.
Do you have some info on this? I’ve been watching the OC for some time and all those foreclosure websites. There are nearly 30 homes in the low end luxury range (1-1.5M) in the area I’m looking at which are in some stage of foreclosure (NOT or NOD, but not counting REO). To be clear, these 30 or so homes are probably within about a 2 mile diameter. In this same area there have been maybe 25 homes that sold for between 1 and 1.5M in the last 12 months and there are at least 25 homes in this range listed right now. Of the 25 sold, more than half were REO or short sale.
These NOT/NODs have been up for months and either have not moved to auction, or if moved to auction have been constantly delayed. At least a dozen are scheduled for auction this month, but I wouldn’t be shocked if none actually went back to the banks or were bought by third parties.
These homes don’t qualify for HAMP or loan mods (I assume because the default loans are at least 800K and likely much more).
Frankly, if the banks expect to sell in the Spring/early Summer the banks likely need to move soon. Evicting the occupants seemingly takes 60-120 days and then the banks usually fix them up a little before marketing. So foreclose November. Eviction takes through February/March. Marketing likely begins April/May.
I just found it interesting that you remarked 2-4 months and was wondering what you base that upon. If based upon prior experience that’s fine but considering there are no current REOs listed in those areas, having even a third of the 75 hitting in the next 2-4 months would be shocking to me.
Thanks for your time.
I think the servicers are done messing around, and they are all trying to figure out how to rush the exits without making it obvious.
Jinx,
Yes, more coming in the under-$685,000 category too, I was trying to find an even 100 group.
There are another 71 SFRs under $685,000 on the F-list in 92009 and 92011.
Overall there are 261 SFRs in Carlsbad on the auction, bank-owned, or 3rd party list. It’s going to change the market to a bank-only, if you were a buyer, why even bother looking at the retail offerings?
“Looks like all the californians are heading est my friends: http://www.latimes.com/business/la-fi-texas7-2009nov07,0,652942.story” (koolaid)
From the article re: the so-called CA shift, I found the end of the article interesting:
“California is a primary target for Lone Star boosters. Last year more than 82,000 people from California moved to Texas, while almost 32,000 from Texas went to the Golden State, according to data from the Internal Revenue Service.
Charles and Joan Baker will be joining that trend this year. Even before selling their Rancho Santa Fe town home, on the market for $829,000, the California couple closed on a ranch-style house in the Sun City retirement community north of Austin.
Joan Baker, who is in her 60s, wouldn’t say how much they paid for the new place, which is slightly larger than their property in San Diego County. But a Sun City spokesperson said the average home in the community of rolling hills is running about $218,000.
“I’m not saying it’s easy to leave,” said Baker, a retired schoolteacher. “The whole San Diego area is lovely. To go north and south, east or west, and be able to see the water, it’s pretty unique.
“But other things are beginning to outweigh it,” she said, complaining about crowding and the state budget mess.”
In the final analysis, we all have to look at the pros and cons of any decision we make in our lives. Especially when you write it down on a piece of paper and it’s in black & white–when the pros outweigh the cons–it soon can be crystal clear what decision to make.
Just my two cents, but Joan Baker may well be the poster child for WHY some folks are leaving the state. Either way, mahalo to “koolaid” for linking it here on bubbleinfo. It was a very good read!
Thanks for the excellent analysis, Jim!
Trading California for Texas? Even with California numerous problems, that’s a very bad trade indeed. To the thousands who are doing it anyway, thank you. I appreciate your sacrifices and will surely take advantage of that soon enough.
To the thousands of Texans heading west…have you heard how wonderful Arizona is? Don’t bother going all the way to coast!