I think this shows the ineffectiveness of loan modifications. Since last November the government has enacted the biggest loan-mod program in the history of the world, and yet there were only 51 additional cancellations Y-O-Y?
Foreclosure sales have been canceled at an increasing rate as loan modifications take hold, according to ForeclosureRadar, a Stockton-area data company that monitors California’s distressed housing market.
For San Diego County, the daily cancellation count increased nearly a third, from 34 in October to 45 last month. There were 741 cancellations in October and 824 in November. In November 2008, there were 773 cancellations.
Meanwhile, 1,283 foreclosures became final last month, down from 1,346 in October and up from 1,115 in November last year.
“We’re probably going to see a wave of cancellations rather than a wave of foreclosures as some have been predicting,” said Sean O’Toole, founder and CEO of ForeclosureRadar.
Statewide, the daily cancellation rate rose 40 percent, based on a total of 8,741 in October and 10,469 last month. November 2008’s figure was 8,302. The daily rate is pegged to the varying number of business days in each month.
Peter Dennehy, senior vice president of Sullivan Group Real Estate Advisors in San Diego, said fewer foreclosures would improve the housing market, at least in the short term.
“We’d have a healthier housing market if we had a better economy and better job prospects and if people are actually able to pay their mortgages,” he said. “It’s not one thing or the other.”
While foreclosures typically carry low prices, Dennehy said first-time buyers often cannot compete against investors or get loans for as-is properties that banks will not pay to repair.
“What we really want to see is normal people buying and selling homes at all levels of the market,” he said.
A supply of 1.7 million homes headed for sale because of foreclosure or delinquency looms over the nation’s housing market, which could dampen progress toward recovery should the Obama administration fail in its efforts to aid struggling homeowners, researchers said.
A variety of measures to keep discounted bank-owned properties off the market — including moratoriums on foreclosures by major lenders and federal initiatives aimed at keeping people in their homes with mortgage payments they can afford — has helped increase a backlog of so-called shadow inventory 55% in the year ended Sept. 30, according to a report released Thursday by First American CoreLogic, a Santa Ana-based real estate research firm.
Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.
“The rich aren’t as rich as they used to be,” said Alex Rodriguez, a Miami real estate agent with JM Group USA Inc., whose listings include a $2.9 million property marketed as a short sale because the price is less than the mortgage, leaving the bank with a loss. “People have reached the point where they can’t afford the carrying expenses of a $2 million home.”
Payments on about 12% of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3% on loans less than $250,000 and 7.4% on all U.S. mortgages, according to data from First American CoreLogic Inc., a Santa Ana, California-based research firm. The rate for mortgages above $1 million was 4.7% a year earlier.
As defaults on the biggest mortgages rise, borrowers such as Steve Holzknecht, 53, are turning to short sales to exit loans that now are larger than the market value of the house. Last month he cut the asking price for his 7,280-square-foot home in Kirkland, Washington, by $550,000 to $1.25 million, lower than the balances of his two mortgages. Holzknecht, the former owner of Four Suns Inc., a Seattle luxury homebuilder that went out of business two months ago, constructed the Craftsman-style home in 2000. He declined to identify his lenders or the amount he owes.
I’m still confused why you said you think the real estate market is going to take off like a rocket in 2010. Was this sarcasm, or did I miss something in the video? And why do you think we had this run up over the last few months in home prices (at least I seem to feel like RB and 4sranch homes went up about 10% from the bottom).
There is heightened anxiety these days among those who are actively pursuing a home purchase.
They are seeing the good buys receive multiple offers right away, and get bid up over list price. Yet there are more bank deals appearing, which could mean that prices will go down too.
What will happen in 2010?
The main event from where I’m standing is that we’re not just seeing crack houses and mold farms getting foreclosed – there are some good-looking bank deals at attractive pricing.
For the buyers who have been making offers all year and still haven’t bought one, the market seems to get better and better, yet more elusive at the same time.
How buyers manage their expectations/emotions vs. increasing bank inventory will determine the market for next year and beyond.
Will buyers bid up every decent bank deal in sight, or cool off if the flood begins?
December 15, 2009 – ForeclosureRadar.com, the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for November 2009. Despite apparent headline month-over-month declines in foreclosure activity, the real story requires looking at changes in the average daily activity. November had only 18 days on which filings could be recorded or trustee sales held because of fewer days in the month, Veterans Day and the Thanksgiving Holiday, while October had 22 recording days, and 21 trustee sale days.
After adjusting for this difference in days we find little month-over-month change in the statistics, with the exception of Notices of Trustee Sale which declined 13.4 percent, Cancellations, which rose 40.0 percent, and Sales to 3rd Parties, which rose 8.0 percent on a daily average basis.
“We’ve been waiting to see some impact from the Home Affordable Modification Program,” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com. “The 40 percent increase in cancellations this month is likely just the beginning of what we expect will be a wave of cancellations under this program”.
Despite the significant drop in filings of new Notices of Trustee Sale, and an increase in the number of Cancellations, the number of foreclosures Scheduled for Sale still rose. The simple reality is that homeowners are continuing to enter foreclosure faster than they are coming out. This will likely continue until we see meaningful progress on loan modifications, or the often predicted “foreclosure wave” finally occurs.
Real estate withholding is a prepayment of California state income tax for out-of-state sellers of California real property. Escrow companies are required to collect 3.33% of the sale proceeds and send to the state on behalf of the sellers.
Now they are hitting the rents too:
Beginning January 1, 2010, property managers will have to withhold 7% of all income, that exceeds $1,500, on properties owned by nonresidents to be sent to the nonresident property owner, unless the owner qualifies for reduced or waived withholding.
