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?
Here is a video tour of a few of the 100 properties on the auction/REO list in 92009 and 92011 – it appears there will be plenty of McMansions to go around!
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!
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.
from the U-T:
A glimmer of light is shining through San Diego’s bleak real estate market, judging from the sale this week of the La Jolla oceanfront home owned by Doug and Betsy Manchester.
The six-bedroom, 11-bath estate, with swimming pool and boathouse, closed escrow Tuesday for $18.15 million. The sale price will make the county tax man happy but, even so, it is 44 percent less than the original $33 million asking price by the Manchesters, who are divorcing.
The buyer is Dallas multimillionaire Darwin Deason, the founder and primary shareholder of Affiliated Computer Solutions, which Xerox Corp. is in the process of acquiring for $6.4 billion. Darwin’s wife, Katerina Panos, is a graduate of La Jolla High School and has strong ties to San Diego.
The Deasons, who will be part-time residents, also own a 205-foot luxury yacht, Apogee, which they plan to bring to Shelter Island next year.
Willis Allen real estate agent Edward Mracek, who with Karen Rockwell represented the buyer, says the high-end market seems to be improving. While there have been higher priced residential sales in the county, he knows of only one La Jolla home that has sold for more — the $23.5 million purchase of a large La Jolla Farms estate by attorney William Lerach in 2005.
more photos here: http://www.sdlookup.com/MLS-090008894
The Deasons also are in escrow to buy a home listed at $10.5 million next door to the Manchester property. They plan to merge the two properties, which once were part of a single estate designed by architect Tom Shepherd in 1929.
Just another baseball-crazy ex-pitcher and purveyor of truth trying to document the SoCal experience….happy 21st wedding anniversary wifey! (yesterday)
hat tip to AL for sending this along, from the WSJ:
The Deed for Lease Program, which Fannie plans to roll out on Thursday, will offer borrowers who fail to complete or don’t qualify for a loan modification or other workout to deed their property to the lender in exchange for a lease. Borrowers-turned-tenants will be able to sign leases of up to 12 months and will pay market rents, which in most cases are lower than the cost of mortgage payments.
Fannie Mae wouldn’t say how many homeowners it expects will take advantage of the program. The company acquired 57,000 properties through foreclosure during the first half of the year, bringing its total real-estate owned inventory to 63,000 properties valued at $6 billion. The rental program will allow Fannie to hold inventory off of already saturated housing markets and makes a bet that the housing market will be stronger one year from now.
Borrowers who haven’t missed any mortgage payments aren’t eligible for the program, and the borrower’s mortgage servicer would have to show that a borrower isn’t eligible for a loan modification before the homeowner could apply for the Deed for Lease program.
The following program eligibility criteria must be met:
1. The mortgage loan is a first lien mortgage loan secured by a one- to four-unit property. All property types are eligible. Second lien mortgage loans are not eligible.
2. The mortgage loan is not guaranteed or insured by a federal agency (FHA, HUD, VA, or Rural Development).
3. The borrower resides in the property as a primary residence or has leased the property to a tenant who uses the property as a primary residence. Second homes or vacation homes are not eligible.
4. At least three payments have been made since origination or since the last modification.
5. At the time of the referral to Fannie Mae for the D4L, the borrower is not 12 or more payments past due on the mortgage loan.
6. The borrower is not involved in an active bankruptcy proceeding and is not a party to litigation involving the subject property or the mortgage loan.
7. Marketable title is able to be conveyed (a title insurance policy is required).
8. If there are subordinate liens secured against the subject, lien releases can be obtained.
9. The occupant of the property (i.e., the borrower or the borrower’s tenant) has verifiable income. Occupants with no source of income are not eligible.
“I’m sure Fannie is hoping that when they sell the properties, the values will be higher,” says David Berson, chief economist for PMI Group Inc., a private-mortgage insurer. “A year from now, we should be a year further into the economic recovery, and housing demand will be stronger…That will allow you to release homes that have been foreclosed upon but not put on the market.”
The program could also help Fannie preserve the value of its nonperforming assets because occupied homes are more likely to hold up better that vacant homes. The rental programs also provide some rental income to the government-backed mortgage finance giants.
The move by Fannie follows a program by Freddie Mac that began offering month-to-month leases to owner-occupants who had lost their homes to foreclosure. But Freddie continues to market those homes for sale. The Fannie Mae program differs in one important respect: foreclosed homes won’t be listed for sale. In February, both companies began allowing tenants whose landlords had lost their properties to foreclosure to sign month-to-month leases.
Borrowers will have to show that the monthly rent is less than 31% of their gross income. The program, which will use a professional management company to handle maintenance, will allow borrowers to renew their leases on a term or monthly basis and properties that are sold during the lease period will include an assignment of that lease to the new owner.
So far, around two-thirds of owner-occupants who have been offered monthly leases by Freddie Mac have taken them, and the break down of owner-occupants to tenants who have rented under the program is roughly two-to-one.
Freddie Mac says it is considering whether to extend longer-term leases to some troubled homeowners. “We’re looking into our options because there are certain markets where there’s just so much inventory on the market,” said Ingrid Beckles, senior vice president of default asset management at Freddie Mac.
In recent months, some industry analysts have been puzzled over why more homes haven’t been put up for sale as the rate of borrowers who default climbs higher. Well-intentioned efforts to keep families in their homes have led to delays that some analysts believe is prolonging the mortgage crisis by creating a “shadow” inventory of pent-up supply that will ultimately hit the market.
That has prompted some to question the logic of keeping homes off of the market at a time when demand for bank-owned properties has been soaring. The number of foreclosed properties for sale in Las Vegas, for example, has fallen to a less than three months’ supply, according to SalesTraq, a local real-estate research firm. But housing demand typically falls in the winter, and the number of foreclosures continues to grow. “We’re past the peak of when you would want to sell,” says Mr. Lawler.
From the AP:
Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn’t owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.
“This is probably the last extension,” said Sen. Johnny Isakson, D-Ga., a former real estate executive who championed the credits.
The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that the Senate included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.
“We are still in a world of economic hurt, and Congress must continue to act boldly and creatively,” said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. “With the right mix of tax breaks and investments we will get through this recession and get folks working again.”
Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.
“For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home,” Bond said. “And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place.”
The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.
A great discussion with Robert Shiller this morning – there’s an ad that plays first:
http://cosmos.bcst.yahoo.com/up/player/popup/?rn=3906861&cl=16352974&ch=4226720&src=news
More from NYT:
Investigators found that more than 500 claimants of the tax credit nationwide were minors as young as 4, so the new measure will require applicants to be at least 18. Homes cannot be acquired from relatives, and taxpayers must submit a settlement statement as proof of purchase, though officials acknowledge that could be a problem for those who file tax returns electronically.
While real estate groups and some economists say the credit has helped stabilize the housing market, critics say it is too costly a subsidy when low interest rates and home prices are incentives enough for most.
Of the 1.4 million claimants of the credit, fewer than a third — about 350,000 to 400,000 — are believed to have bought their homes because of the credit, according to independent and industry-affiliated economists.
Under the new legislation, individuals with income up to $125,000 a year and couples earning up to $225,000 would be eligible. The current income limits are $75,000 for individuals and $150,000 for couples. Under both the House and Senate versions, smaller amounts are available to people of slightly higher incomes until the credit phases out.
They have to do something, right?
As servicers receive more and more REOs, they have to be discussing their options:
1. Use the trustee sales as a primary liquidation channel to off-load more properties quickly, cheaply, and without recourse.
2. List the habitable properties with realtors, and sell for retail.
3. Sell the fixers at auctions.
4. Bulk Sales.
They have to be encouraged about the tax-credit extension, and dozens of bidders at trustee sales around the country. They have to be loading up the truck, and thinking they should take advantage over the next six months.
I think buyers will flock to any well-priced new listing, but take particular interest in stealing one from the bank. You can probably expect that options 2 & 3 above will be very active channels of re-distribution.
But if they get to the point where they really want to off some property, doing it at the court house steps is very handy.
Let’s be there to take advantage:
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.
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