Here are the recent foreclosure stats for San Diego County.
It appears that the banks/servicers have found a steady rut for their foreclosure production:
It’s hard to believe that NODs are down 15%.
It’s doubtful that they’ll deviate from the plan if it is working? They declare that they are doing more short sales in order to help people avoid foreclosure, and the government gets off their back.
Foreclosures are inching up again, while closely watched defaults shot up 34 percent in March — the largest monthly increase for San Diego County in more than two years.
Analysts at DataQuick Information Systems on Tuesday reported there were 1,837 mortgage defaults in March, up 34 percent from February but down 19 percent from a year ago.
The company’s numbers also show there were 1,047 foreclosures in March, a 17 percent increase from February but an 8 percent decrease from the same time last year.
Some industry leaders predict monthly numbers will continue to rise this year as banks are apparently becoming more expedient with foreclosure processes and people continue to walk away from their homes, even when they’re able to afford the mortgage payments.
March’s monthly increases may indicate that lenders are becoming “more comfortable going forward with notices of defaults,” said Dave McDonald, a branch manager for New American Funding in Bonita and a past president of the California Association of Mortgage Brokers’s San Diego chapter.
Another factor that could lead to more defaults: homeowners who took on five- and seven-year adjustable rate mortgages, or ARMs, during the height of the market. McDonald said those consumers are expecting drastic changes in their loan terms this year and in 2012, which could mean increases in monthly payments. In the past, he’s seen them go as high as $800 more a month for some homeowners.
Since refinancing is an unlikely option, McDonald suspects many will end up defaulting on their loans. “It’s the next wave (of defaulters,)” McDonald said.
Gary Laturno, a San Diego real estate broker whose expertise is in foreclosures, is still in the wait-and-see category with foreclosures and defaults this year.
Still, Laturno concedes the state of the county’s distressed market is volatile. He’s still seeing a number of “strategic defaulters,” homeowners who walk away from their homes because they are so underwater, even when they can afford to make the payments.
“I think we have a long way to go” before the distress is over, said Laturno, also a San Diego attorney.
A bill introduced in the U.S. House of Representatives would waive early distribution penalties on certain qualified retirement plans if the funds are used to buy a house that has been in foreclosure for a year or more.
Bill Posey (R-Fla.) introduced H.R. 1526 — the Housing Recovery Act of 2011. It has been referred to the Committee on Ways and Means.
“It’s not an end-all fix,” Press Secretary George Cecala said. “It’s just another idea to help the housing market.”
The idea is to add stability to neighborhoods by promoting purchases by owner-occupants or those seeking a second home rather than investors who immediately “flip” the home. Under the bill, the purchaser must agree to hold the property for at least two years to be exempt from early retirement plan distribution penalties.
The bill is expected to apply to distributions from Roth IRAs, 401(k) plans and company pension plans. It would require the person to use the retirement distribution within 120 days of receipt by buying a home that “has been in foreclosure for a year or more.”
Cecala said Posey, a Realtor, anticipates that the one-year period would begin at the point that the foreclosed property is listed for sale, but said the congressman is open to amending the bill to be more specific about when the clock would start ticking.
Several states have extremely drawn-out foreclosure processes. Foreclosures in judicial state average about 13 months from start to finish. But once foreclosures are repossessed by the lender and enter what is known as real estate-owned status, or REO, it is not uncommon for them to be snapped up once listed for sale.
In Posey’s home state, his district covers Florida’s “Space Coast” not far from Orlando area. He is owner and founder of Posey Realtors & Co. in Rockledge, near Cape Canaveral.
The only bank that has been penalized for mortgage servicing lapses got slapped for doing the opposite of what state attorneys general have been demanding.
Bank of America Corp. was penalized in the fourth quarter for delaying foreclosures — not for moving too quickly. B of A expects to pay an estimated $230 million of “compensatory fees” to Fannie Mae and Freddie Mac for the lag.
Now, experts are wondering whether the absence of any regulatory fines amounts to a green light to speed up the processing of foreclosures as long as the paperwork is in better order.
“It’s ironic that servicers are being fined for not foreclosing fast enough but have faced no penalties for their poor performance on loan modifications and not helping borrowers,” said Steven Gillan, the executive director of the American Alliance of Home Modification Professionals, an Astoria, N.Y., company that helps servicers with the government’s loan modification program.
Regulators have failed to punish servicers for noncompliance with the Home Affordable Modification Program because, they say, they lack the authority to assess penalties.
Fannie has assessed similar fees against other servicers for dragging their feet in completing foreclosures within its prescribed deadlines, said Maureen Davenport, a Fannie spokeswoman, but it has not disclosed the names of the other servicers or the amount of fees assessed.
Whether servicers should pay fines — and how much — for lapses is a focal point of settlement talks with state attorneys general and federal banking regulators.
Cease-and-desist orders are expected early this week from federal regulators against the top 14 mortgage servicers, but they are not expected to include any monetary penalties. Instead, the regulators likely will demand servicers hire more staff or slow down the foreclosure process.
Fewer Americans are falling behind on their mortgage payments; in fact, the fewest in two years. Mortgages just one payment past due (30 days) fell to their lowest level since just before the recession began.
Is it delays in paperwork from the so called “robo-signing” (faulty paperwork) foreclosure servicing scandal? No. It’s actual fundamentals in the economy and the mortgage market. Go figure.
“As we got toward the end of 2010 we began to see another drop in weekly claims for unemployment insurance. I think that’s a key driver of the short term delinquencies,” notes Jay Brinkmann, chief economist at the Mortgage Bankers Association.
But even more significant is the improved underwriting that began after the mortgage market crashed. “The loans that are in the system now on average are better quality than what was in there before,” says Brinkmann, who explains that loans usually go bad in the first three years of life. We’re now past the delinquency peak on loans that were underwritten during the worst, headiest phase of the housing boom in 2006 and 2007. “These new loans are less likely to go bad,” Brinkmann adds.
The biggest issue going forward is not new delinquencies, but the huge pipeline of loans already in the foreclosure process. It stands at 4.63 percent, tying the survey’s record high. This is due to foreclosure paperwork issues that have stalled the process, especially in the key state of Florida, where nearly one quarter of all mortgages are either delinquent or in foreclosure.
There have been several attempts here to bust up the media’s insistence that foreclosures cause prices to plunge. The servicers get appraisals and BPOs completed on every asset, and price them accordingly to achieve top dollar – they aren’t giving anything away.
The national statistics will probably reflect a downward trend. If so, it’ll be more due to the cheaper junk being sold, than the prime properties – the owners are trying harder to keep those.
Saving your home from foreclosure is increasingly a do-it-yourself project.
Lawyers are scarce and free legal assistance is overwhelmed in New Mexico, so a community center here is offering an hourlong class in how to download the correct forms, decipher the lingo and mount a defense, however tentative and primitive, against a multibillion-dollar bank.
“I don’t see success for someone like me who doesn’t understand the law,” said Skylar Perea, a senior care aide who fell behind on her payments during the eight months she was out of a job. “But it’s better than nothing.”
In New Mexico, New York, Florida and the 20 other states where foreclosures require a judge’s approval, homeowners in default have traditionally surrendered their homes without ever coming to court to defend themselves. (In the 27 other states, including California, Nevada and Arizona, homeowners have a much harder time contesting a foreclosure even if they want to.)
That passivity has begun to recede. While many foreclosures are still unopposed, courts are seeing a sharp rise in cases where defendants show up representing themselves.
Mr. Lawson is skeptical that self-help clinics are a solution. “We have overwhelmed judges and impossible lenders,” he said. “It’s hard enough for lawyers to deal with them.” In the Albuquerque class, Ms. Anaya Allen does not promise a happy ending. “At the end of the day, unless you have major defenses, it’s likely the court will make a finding of foreclosure,” she said.
Norma Canales and her boyfriend, Saul Valdez, were merely hoping for a little leverage against their lender. They fell into default when Ms. Canales got divorced and her husband stopped making house payments.
“We were working with the bank, trying to work something out, and now suddenly we’re in foreclosure,” said Mr. Valdez, 39. The couple never realized they could represent themselves in court. “It gives you,” he said, “some sort of hope.”
I made a brief comment towards the end of this video about strategic defaults.
I don’t know how many people are strategic-defaulting. But when the servicers insist that you start missing payments to get their attention, then work you over during the loan-mod/short-sale process while getting you addicted to the free-rent program for a year or two, it wouldn’t surprise me that a large segment of the foreclosures are voluntary:
Notices of default, the first step in the California foreclosure process, dropped 17.5% in the fourth from the year before, but the decline may not have come from borrowers improving their financial situation, real estate data provider DataQuick said.
Lenders recorded 69,799 NODs at California county offices in the fourth quarter, down from more than 84,000 in the fourth quarter of 2009 and the lowest level since the second quarter of 2007.
“We don’t know how much of the decline is due to less household financial distress, and how much is due to shifts in lender and servicer foreclosure policies,” DataQuick President John Walsh said. “The level of default activity would certainly be higher if it weren’t for alternative strategies such as short sales, or even lengthening grace periods.”
More than half of the homes in California that received an NOD in the last 18 months have been foreclosed on or sold through a short sale. The status of the other half isn’t clear, DataQuick said, but they should be in the modification or short sale process.
“The institutions that hold these loans in their portfolios will do whatever it takes to lessen their losses, including waiting,” Walsh said. “An additional factor is all the turbulence when it comes to the formalities of the foreclosure process.”
Sean, our Los Angeles correspondent, files this report:
Jim,
Up here in LA it looks like BofA/Countrywide just threw the foreclosure machine switch back to the “on” position. The number of Recontrust properties with opening bids set for tomorrow’s trustee sale auctions just spiked, so it looks like whatever self imposed delays or moratoria they had put in place during the past few months just came to an end. Let’s cross our fingers and hope that maybe last year’s misbegotten prediction that they would crank out 65k foreclosures is about to come true a year later.
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