There has been a rebound lately in the number of weekly trustee sales resulting in REOs, but still relatively low numbers overall, compared to where we think they should be:
Below is the quarterly chart for the last three years. Even though the foreclosure moratoriums are mostly expired, there haven’t been more properties getting foreclosed than in 2008 – but add in the cancellations and it looks to be about the same (or more) volume as 2-3 years ago. Are banks letting people off the hook, or did defaulters get their loan mod? Or were they just bluffing?
But you might be able to say that the servicers must be getting sharper on price, and/or the investors are getting more optimistic – the third-party purchases have gone up substantially since 2008.
It could be just the area that I’m looking in, but Mr. Foreclosure has been making frequent visits to the neighborhoods that I’ve been watching in the last month. Just last week another SS that I had an offer on was visited by Mr. Foreclosure. I haven’t seen any sold to thirds in a while.
Processors are not following through cause every time they are ready Obama throws them another hurdle. Good thing the government can print money otherwise FNM, FRE, and the FHA would be having major cash flow problems right now.
JtR,
These are my anecdotal observations from LA:
A small group of lenders/servicers seem to be ramping up the actual sales at auction. BofA/Countrywide/Recontrust and JPMorganChase/Wamu are the most notable in this respect.
Perhaps as a result of the above, the total percentage of noticed sales actually taking place each day (as opposed to being postponed or cancelled) appears to be rising. Back in November and January it was around 7-8% of each days sales would actually happen, while 8-9% would cancel and 80-85% would postpone. Now I’m seeing about 10% sell, abuot 10% cancel and about 80% postpone. It’s a small change, but could signal the beginning of the end for the modification based cancellations and the beginning of the beginning for actually addressing the enormous backlog.
Finally, I hear stories of 5 year I/O and option ARMs recasting and people’s monthly paymets doubling due to amortization of the prinicpal, even with the floating rates at historic lows. Yes, many of these loans were already in default, but the recasts are forcing distress on the remaining borrowers who used these loans to buy into the frenzy of 2005-2007 and could cover the nut up to now. Not a tsunami by any means, but marginal distressed inventory, some of which will become short sales or conventional sales as owners buckle.
Your point, of course, that in a supply constrained market these may all simply amount to a drop in the bucket, remains fundamentally correct. But alot of RE is psychological, and if the over the summer the perception develops that RE is headed down again, the will more owners throw in the towl? Will more retirement aged, low cost basis owners head for the exits to cash out? Or will Uncle Ben’s greenback and tonic keep the party going indefinitely?
WftM,
I LOVE it when a bs shortsale gets foreclosed. Especially when the listing agent, who I have asked about the pending auction date, insists that there will be no foreclose because they have an agreement with lender.
I don’t think it’s the government stopping foreclosures here per se. It is the banks, hoping for loan mods. There are houses out there with $400k worth of loans that are only worth $150k on the open market (subtracting costs, that’s probably $125k net or less to the bank). It makes sense for the bank to not foreclose as long as possible if there’s any chance of payments being made on the $400k balance. Heck, an actual principal reduction (very rare) to $300k or $250k is better for the bank than foreclosing. Also, since inflation is currently zero, there is no incentive for the bank to go quickly.