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REO sales will peak when the banks decide to peak them.  From HW:

The sale of properties repossessed through foreclosure may not peak until 2013, keeping home prices from a meaningful recovery for some time, analysts estimated Monday.

Nearly half of the more than 552,000 REO properties liquidated in the first half of 2011 were held by private banks. In the years ahead, the government — including the Department of Housing and Urban Development, Fannie Mae and Freddie Mac — will begin taking a majority of the activity.

In 2013, REO sales could reach 1.48 million properties, according to estimates from Bank of America Merrill Lynch analysts, a 10% increase from projected amount in 2012.

“We do not expect to see anywhere near the downward pressure on home prices that we had back in 2008, since the expected percent changes in liquidation volumes are so much smaller,” BofAML analysts said. “But home prices are starting from a negative point, so the implication is that home prices will continue to decline as the foreclosures transition through the pipeline.”

Most of the projected increase will come as the government begins to unload its backlog. The government-sponsored enterprises and HUD, analysts estimate, will liquidate roughly 595,000 properties in 2013 alone.

Total REO liquidations wouldn’t drop below 1 million until 2015, according to BofAML.

The Obama administration began work last month developing new strategies for selling this mass of properties, which may involve renting more of them. The Federal Housing Finance Agency is also working on a way to refinance more underwater borrowers to entice them from walking away.

“I would essentially rent the house back to those who are living in them now,” said Susan Woodward, an economist with Sand Hill Econometrics. “I don’t think it makes a lot of sense to push 4 million people out of their homes when they’re victims of a slower economy they had nothing to do with.”

Other analysts were skeptical of anyone who could predict accurately what the GSEs or Washington would do, especially after the elections in 2012.

“Do they really think that the government under any administration would let 500,000 homes hit the mark and crash prices all over again, six years after the first crash?” said Scott Sambucci, chief analyst at Altos Research.

He said even if unemployment improved by a full percentage point or two — which he said would be a stretch — the market would still struggle to meet such a supply influx.

“It would crash the market, so no, it’ll never happen,” Sambucci said.

Daren Blomquist at RealtyTrac, which monitors foreclosure filings across the country, said the sale of REO is on track to reach 825,000 by the end of 2011.

“We do expect the REOs to pick back up in 2012 as lenders push through some of the foreclosures delayed by processing and paperwork issues,” Blomquist said, adding the inventory needed to be sold could reach well into the millions.

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From Sean at www.foreclosureradar.com:

Five major lenders made announcements last week that they would be suspending certain foreclosure activities in various states. These lenders included Ally (GMAC), JPMorgan Chase, Bank of America, Litton and PNC.

While this report is primarily focused on September foreclosure activity, it is important to note that we have yet to see any impact to foreclosure sales within our coverage area through Friday, October 8, 2010 by these lenders.

“We regularly see lenders make minor mistakes in foreclosure filings” says Sean O’Toole, CEO and Founder of ForeclosureRadar.com. “But the reality is that far more homeowners are behind on their mortgage payments than are even in foreclosure. The clear problem in the housing market today is not foreclosures, but negative equity; and as long as the focus remains on the symptom rather than the disease we will see little progress towards real solutions and this crisis will drag on for years to come.”

View all California stats by county, city or ZIP:

http://www.foreclosureradar.com/california-foreclosures

View the San Diego County stats by city or zip code: 

http://www.foreclosureradar.com/california/san-diego-county-foreclosures

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The properties getting foreclosed in SD County - mostly the older, cheaper homes:

These days, every time you read the news you’ll see another expert talking about the shadow inventory coming home to roost.  Depending on the guesser, there will be somewhere between 3 million and 8 million homes that get foreclosed in America over the next 1-10 years.  Can we narrow that down a bit?

The shadow inventory that is hardest to count are the borrowers who are not making their payments, but aren’t on the foreclosure rolls yet.  LPS came out with this chart (below), so let’s use their numbers and envision what would happen if banks/servicers change course, and ramp up the foreclosure machine:

The chart shows 17,800 defaults (today the NOD and NOT count is 14,435 on foreclosureradar), and 34,200 properties in San Diego County that are at least 90-days late, for a total of 52,000.  

How would it look in your area if EVERY ONE of these were foreclosed in next 12 months?

To estimate the total number of defaulters plus 90-day late borrowers for each area, let’s use the multiplier formula here: 17,800 x 2.92 = 52,000.

Let’s multiply 3x the current defaults in each area/zip code:

If servicers crack down and foreclose on every 90-day late property, we’ll see one flipper or REO listing on virtually every block in areas like Spring Valley. But with all the foreclosure activity over the last few years, would it bother buyers to see 1 out of 40 or 50 homes getting foreclosed? I don’t think so, and this is probably the worst-case scenario over the next year.  The current SD default list is split 65% SFRs, and 35% condos/others, so spread it around as you visualize what might happen in your area over the next 12-18 months. 

In areas like Carmel Valley, where we’re estimating 237 SFRs and condos on the NOD/NOT/90-day list, it would bring relief to buyers starved for well-priced inventory.  We know some defaulters will get their loan mod or be short-sold, but if not, and 15-20 foreclosures per month came on the market, it wouldn’t overwhelm the market - 71 homes sold there last month.  Hopefully, it might scare some of the elective sellers back to the sidelines, to be replaced by bank-owned inventory.

In Carlsbad, if you divide the current NOD/NOT/90-day list by 12, it would mean roughly 56 REO or flipper listings per month, and 124 sold there in August.

We’ve expected that we’d be in a heavy bank-inventory environment by now, yet the ‘delay-and-pray’ strategy has been employed instead. If 30% to 50% of the for-sale inventory was well-priced bank deals (flippers are retail-plus) it could boost sales.  If servicers insist on the extend-and-pretend strategy, sales are going to slow down, unless elective sellers get more realistic.

Servicers, please foreclose on every defaulter in the next 12 months – homebuyers would appreciate the well-priced inventory!

Sean and the folks at Foreclosureradar.com are very gracious in providing their data, though I don’t like this – fewer trustee sales, and more cancellations.

If the trend continues, we’ll have fewer REO listings, which are typically well-priced and vacant, and instead have more short-sales and loan modifications:

The bulk of the defaulting mortgages are from refinancings, which are full-recourse.  Are the lenders/servicers gearing up for The Big Collection?

Maybe not, and perhaps the opposite.  They could be anticipating HAFA, the latest foreclosure-avoidance device that encourages lenders and servicers to approve short sales, and deeds-in-lieu of foreclosure.  HAFA begins April 5th.

HAFA directs the servicers to pre-approve the short sale, prior to listing the home for sale. 

Once approved, the homeowner gets four months to sell the house, stalling any foreclosure proceedings, and then gets $1,500 for moving expenses.  It also looks like the homeowner get released from all liability too. 

Here are more details on HAFA, from Inside Mortgage Finance:

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http://www.sdlookup.com/MLS-100005290-916_Mira_Mar_Oceanside_CA_92054

Who do you call once you realize you’ve been hacked?

ROB DAWG!!!!

Bryce was the first to email the news, and within 60 seconds I had Robert on the phone.  He was happy to oblige, and boom, here we are, right back in business!

Thank You Robert!

Our website designer Stefanie pitched in too, adding more security measures – if you ever need help designing your website, her contact info is at the bottom of the screen.

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Let’s ponder the future – what can we expect for 2010 in North SD County Coastal?

1. More distressed properties for sale.

So far in the fourth quarter we’ve had 1,213 new listings in NSDCC, and 258 of them are short sales or REOs, or 21%.  The overall county 4Q stats are 43% short sales and REOs – we’re due to catch up with heavy activity expected on the ARM-recast chart. 

2. More short sales showing up on the court house steps.

The sellers have to cooperate fully, and in many cases it’s better for them to be foreclosed – expect more short sales to fail as a result.

3. More loan mods showing up on the court house steps.

The loan mod terms aren’t that much better, and the free rent was good while it lasted – are modders going to go back to making big payments?  Doubtful.

4. Banks/servicers unloading

It may not be a tsunami, but the drip has to at least turn into a slow meandering stream.  There have been 103 closings in the fourth quarter in NSDCC, but there are 872 properties that have received their notice of trustee sale!

5. Housing Tax Credit getting credit for sales activity.

Who knows if it helps, and there’s little benefit in the more expensive areas.  But it gives people something to talk about.

6. Chargers winning Super Bowl.

Let’s not get too hyped up, it’s only been 8 wins in a row, and Norv is still the coach.  But if a miracle happened, it would make people feel a little better.

7. Lower pricing

Forget 1-6, all that matters is number 7.

Take a look at the latest pricing from the court house steps, via youtube:

Cielo, a gated community at the edge of Rancho Santa Fe, has struggled to build sales momentum.

There are 26 active listings (this house is number 13th on the list), ranging from $1.595 to $7.999, and five contingent/pending listings currently, but only seven have closed over the last six months, averaging $301/sf:

The nine lots at the end were listed for $4+ million, but the listing expired.

The REO hits just keep on coming in Rancho Santa Fe.

We saw Lago Lindo list for $1,879,000 and receive eight offers, with bids over $2 million. These days the buyers roam from REO to REO, in search of the right deal, with only glimmers of hope that a regular seller will be reasonable on price.

Will this new REO listing get swept up in the frenzy?

What would you think if you discovered that the house right next door just listed for $220,000 less than you paid 2 months ago….

If the next-door buyer relied on the same faulty tax roll information that I had, he should sue.

These new REO listings in the Covenant should help loosen up the stand-off between buyers and sellers in the Ranch.

When checking the sales in 92067, 92091, and Fairbanks, you could say sales have been a bit stagnant. In 2005 there were 253 houses that closed escrow between Jan. 1 and Oct. 30, and this year there have been 119 houses close YTD, a 53% decline.

Here’s the latest REO: