From sddt: “Even with NOD numbers virtually flat with 2,880 in October and 2,875 in September, 2009 is on pace to break 2008’s record-breaking 34,069 NODs filed in a single year. With two more months to go, 2009 has racked up 33,904 NODs and has averaged 3,390 per month.”
According to foreclosureradar.com, about 25% of the trustee sales in October were purchased by third parties on the courthouse steps.
There were 877 REO listings inputted onto the MLS last month.
see, I just do not *get* this gap. are all these NODs trial mods?
the SD NODs follow OC NODs very closely:
http://spreadsheets.google.com/pub?key=pGy0BQU1PZ9DkdsiaqdkuEQ&gid=3
if you shift the REOs by 12mo, you’d see that they used to match up very well. I think the cure rate was all of 3%. But when the moratoriums started in early 08, the REO numbers stopped matching up with the NODs.
http://spreadsheets.google.com/pub?key=pGy0BQU1PZ9DkdsiaqdkuEQ&gid=5
So whats the answer?
1. tons of inventory that the banks havent foreclosed on (and cure rates havent changed)
2. cure rates have increased significantly
Or is there a 3rd option that I’m missing?
see, I just do not *get* this gap. are all these NODs trial mods?
the SD NODs follow OC NODs very closely:
More than one NOD may be filed per property (more than one mortgage), but only a single trustee deed can be filed per property. From what I’ve read this has been more common in 2009 than 2008, but I don’t have data to prove it.
There’s also been a huge number of trial mods, but I haven’t seen any SD specific numbers. There’s no telling what way these will go, but if past performance is any indication most mods end up back as NODs. Of course, this would double up on the NOD numbers as well since in 2009 a single house could receive a NOD twice before preceding to trustee sale.
Jordan,
No offense, but I think you’re missing what DaFox said about the relationship. He’s not talking about absolute numbers, but rather the relationship between NODs and NOTs.
I would only add one thought, and distill it somewhat more simply.
1. History hasn’t changed, and banks are just even more swamped than they were one year ago.
or
2. History has changed, and cure rates are enormously different today than they were one year ago.
or
3. Some combination of the 2.
Personally, I’d put the likelihood at the simplest solution. With the moratoria, banks were simply bludgeoned over the head with too little to foreclose on, and now too much to foreclose on. I have seen inventory grow in one search area 10% just this week alone, much of it due to foreclosures hitting the market at about 80% of inventory for that search (mid-priced homes in South Orange County)
It’s anecdotal, but that’s all I’ve got at this point. There seems to be very little scientific evidence for #1 or #2.
Chuck
None of the above. The loans are neither cured nor going to trustee any time soon. They’ve been modified, many of them already in re-default, which is a limbo not much different than a staggered out foreclosure moratorium.
One thing has definitely changed in history, and it’s how long it takes for the average house to foreclose after its first default. It’s gone from 6 months to 9 months to 12 months and now this.
No offense, but I think you’re missing what DaFox said about the relationship. He’s not talking about absolute numbers, but rather the relationship between NODs and NOTs.
The point of my post was to try and explain why the relationship changed in 2009 versus years past. If NODs are being counted and filed differently in 2009 versus years past, you could see a one time increase in NOD numbers without the corresponding increase in trustee sales. Such as filing more than one NOD per property in 2009, or the same property being more than likely to go NOD – mod – NOD – trustee all in 2009 when this was rare in 2008 and before.
Exactly, in addition to other explanations, the actual ratio of NOD to NOTs has changed and so has the lag time among other correlations. The charts look perfectly find once you consider these two factors – you just have to slide the NODs by more months and expect a more spread out conversion rate.
I think there will be plenty more foreclosures coming down the piplene.I would estimate that 70% of all homes sold in az, nv,ca, and florida between 2003 & 2007 to encounter some problems.So how many sales / year in ca?
There is no consequence for buyers to walk away.If you are upsidedown >100k you might as well send the keys back and start over.Save some money and give it another shot after 3 years.They treat home ownership like a casino these days.The amount of financial illiteracy is just staggering in the usa.
What percentage of short sales end up in foreclosure?The banks should quit this short sale nonsense and get on with the show.They are prolonging the inevitable.
If that’s the case Huggy, I think I can live with it.
But let’s say 2004-2007. Those who bought in 2003 could have survived, or sold comfortably by now.
2004-2007 = 141,490 SD sales x 70% = 99,043.
Since 1/1/08 there have been 58,694 sales, and at least half of those were REOs or short sales (probably more).
58,694 x 50% = 29,347
99,043 – 29,347 = 69,696 to go.
If it ends up being all distressed, all the time for the next two years, we’ll clear it out (the 2009 sales should be around 34,000).
Just a note for the record, it was yours truly who offered a WAG at the last panel discussion that the case-shiller index will bottom in 12/2011. It primarily measures the distressed sales.
Those who choose a short-term loan mods and end up distressed after 2011 will be offset by those buyers who were previously foreclosed and who’ll be hungry to get back in.
Please never, ever, EVAR utter the name “Huggy.” Read the MB Confidential blog comments sometime if you’re masochistic and/or curious why.
I mentioned this before, but I would like to mention this bit of inside information again.
My inside information is through a friend of the family who knows a V.P. at a major bank who runs their REO Dept. She has been advising not to buy now and she has been saying this for over a year. She says that banks including hers is under enormous pressure from the Federal Government not to foreclose, and especially not until after Christmas.
Right now she is saying fall 2010 will be the time to buy.
This totaly squares with what I think is happening to the default inventory.
Think about it for a moment, record levels of defaults every month this year, and almost nothing for sale on the MLS. Stories all over the place of people 6 – 12 months even two years with out making any payments and still not foreclosed on.
I am being told that the banks will start foreclosing sometime in 2010.
I read an interesting article in Newsweek tonight about the new bubble. I think it is probably obvious to everyone that stocks and realestate has entered a new bubble, the article says a lot of it is driven by gov. stimulus, and the fact that Gov. bonds and saving accounts and CD’s pay little to nothing in interest. Same reasons the bubble started in 2000. They call it an “echo bubble”. The writer feels these types are much shorter lived than the original bubble.
My feelings are that this bubble will pop just about the time the stimulus disappears.
The ECHO BUBBLE is here
Think about it for a minute;
Record levels of unemployment, record levels of defaults, 20% decrease in real incomes… and real estate prices are rising!
This type of disconnect that we are witnessing is the classic definition of a market bubble.
Think also what is hanging over this new bubble.
Record levels of pent up foreclosures, Gov. stimulus that will disappear at some point, Interest rates will rise once Federal Reserve stops buying US bonds, millions of baby boomers needing to sell to pay for retirement at some time,
and what about the employment situation?
What I am trying to say is we all need to identify what is happening and understand the situation of the market.
With out a doubt we are in a new real estate bubble and it is called
the ECHO BUBBLE.
Hi Greg.
Is an Echo Bubble the same as a “Dead Cat Bounce“?
Or, do you fundamentally see something different?
A dead cat bounce, I understand. An echo bubble, I have never experienced before, and I know of no historical precedent… even when the Dutch government tried to prop up tulip prices with a 10% stated contract enforcement policy, it only worked for a few weeks before crashing further. Do you know of an experience where government was able to keep a bubble from deflating?
Chuck
The bubble is in the use of the word bubble.
Chuck,
A dead cat bounce may be the same thing as an echo bubble. What I am seeing here in LA county were I live is a total repeat of what I saw back in 2005 and 2006. Which is often a total disregard of comparables that may have just sold a month or two ago.
I understand that the inventory is at an all time historical low, and why?
The LA times did an article and said close to 50% of California home owners are under water and can not sell their homes. The Reo market is the real estate market, and banks are under severe pressure not to foreclose.
I also know that it is very hard to get a lone right now, and that many Baby Boomers are using their 401K’s and paying cash to buy REO’s and renting them with the hope of getting a 5 to 5.5%yearly return.
What I am saying is that one has to consider the extremely unusual forces that are influencing the market… unheard of stimulus from the Gov. and Federal Reserve, (tax credits, artificially low interest rates, foreclosure morotoriums, bank controll, 401k real estate programs). Add to that that Most California home owners can not sell. Because of all of this we have an extremely tight market that is perversly manipulated by big brother.
Even Peter Shiller was quoted recently that he sees us going back to a new bubble.
The article I just read at News Week http://www.newsweek.com titled “New market bubble is brewing”. Was saying that smaller bubbles that follow on the heels of larger ones, usually after authorities helicopter in loads of cash to patch up the damage. The phenominon has been observed throughout history. Echo bubbles tend to be smaller and fade away faster than the first bubble. All bubbles are illogical, and that market participants tend to think they can beat the crowd, but they are the crowd.
Chuck in regards to you question “Do you know of an experience were the Government was able to keep a bubble from deflating?”
Chuck we are living in that experience. Do you realize were the Real Estate and stock market would be if there was no $8,000 tax credit, foreclosure moritorium and FHA, And Freddie and Fannie were not doing their current 85% of all residential mortgages. Plus the fact that all the major banks are all now flush with TARP money that they don’t need to dump their Reo’s on the market!
I firmly belive that the Government and the Banks will keep the stimulus flowing as long as they can, but when it stops, look out.
Jim, what about the cash out re-fi’s? I think there are plenty of those as well.
Bond market is getting scared the the fed is going to increase rates. Gold is also going throughthe roof.
Is it likely that house prices will go up? No
cash out refi’s are a huge problem. most of the NODs I’ve seen in my north OC coastal towns are from ‘older’ owners (pre 2002) just borrowing their way out of their home.
Chuck had a post on that a lil while back.
“cash out refi’s are a huge problem.”
These loans are not non-recourse like purchase loans. I would think that walking away would be a little more difficult although people are obviously doing it so what do I know.
cash out refi’s are a huge problem. most of the NODs
I was figuring them in, I said plus or minus, didn’t I? 😉
Interesting thought that MOST NODs are from refis, I’ll take a look at that.
We’ll see, I’m going to continue to look at my own market to see the status. At least for the last seven days there have been 10 foreclosures reported and 4 closings in PQ.
Maybe I should make a spread sheet for the area tracking foreclosures, preforeclosures and closings every day to see the trends before it pops up on the MLS.
Today’s Wall Street Journal, page C7: ” Wells Fargo Takes Chance With Loan Exchange”. Option ARMs are being “shifted” to interest-only loans for SIX to TEN years. How far can they kick that can down the road?
Option ARMs are being “shifted” to interest-only loans for SIX to TEN years”
So, after another six years of interest only, the borrower now not only still has no equity, they owe 1/3 more on the loan than they did at the start. Nice!
Banks should just go into the rental business, they are just about already there.
Speaking of banks going into rental business…what is the chance that we see the rental prices take a big hit soon. It’s one of the last housing related measures where the “extend and pretend” is off the table.
I’m thinking of calling my landlord asking him if he’s willing to reduce my rent to the interest only portion of his mortgage. He can bill me for the principal at the end of my lease at which point I squat and wait for cash for keys.
Greg in LA wrote … Record levels of unemployment, record levels of defaults, 20% decrease in real incomes… and real estate prices are rising!
Greg in LA, the unemployment and the declines in real income have accumulated over the past 2-3 years. Real estate has accumulated large losses over that period as well. Down by ~40% in many places.
Jim, you may want to put this on your next newest post so this news is buried on this older post.
~~ Breaking News ~~CNN/Money article entitled: “$8,000 Home Credit Still In Play”. And the subtitle is:
“Negotiations About Whether and How To Extend and Expand the Tax Credit For Homebuyers Are Moving Quickly. Here are the latest developments”.
And the link to the one-page article is:
http://money.cnn.com/2009/10/28/real_estate/homebuyer_credit/index.htm?postversion=2009102913
Susie, that link is old. The senate just passed the extension and expansion.
http://www.cnbc.com/id/33627573
Interesting thought that MOST NODs are from refis, I’ll take a look at that.
Please do! Given CR’s numbers on bubble-era MEW I’d be surprised if huge numbers of pre-bubble purchasers weren’t involved.
Scooter, yes you are correct that this problem has been in the works for years.
My point is to identify the reason for the price increases and to point out that the current market is disconnected from the underlying state of the economy. All of which is true.
My concern is that the government stimulus is setting a trap for the uneducated.
I want readers to understand that Washington and Wall St. are distorting the market, and that readers use this knowledge to make an educated decesion.
Bye the way, All this crazyness that has happened in the last few years has taken everybody by storm. Three years ago some people did think a real estate crash was possible, but who knew that trillions of dollars were going to be thrown at the bust. Who expected the bail-outs, and the moratoriums, tax credits, Tarp, and Hamp, and loan modifications! The list goes on and on and on!
I had no idea what the impact and ramifications of all of this would be. I am learning on the job just like every one else.
Bottom line, the people in the market now are in a heavyly manipulated market, That is an undeniable fact.
Now ask yourself which direction will the market go once the stimulus is gone? And in that situation will you be trapped?
Scooter,
sorry I forgot to sign the above post.
“Susie, that link is old. The senate just passed the extension and expansion.” (Pemelisa)
You’re right! Proves I should get more sleep. I didn’t notice the date; I just knew I hadn’t read it yet. Mahalo for the newest link.