Citigroup reported last week, and so did Bofa – from HW:
Bank of America reported $35.7bn in nonperforming loans, leases and foreclosed properties in Q210, which is 15% above levels measured in the same quarter of last year.
These loans and properties increased more than $5bn in total aggregate balance since Q209. The total did drop by more than $200m worth of these loans and properties from the $35.9bn reported in Q110. They represented 3.74% of all outstanding loans, leases and foreclosed properties at the end of Q210.
BofA reported $3.1bn in Q210 earnings despite losses in its mortgage division. BofA is continuing efforts to keep these troubled mortgages out of foreclosure. Since 2008, BofA and the acquired Countrywide completed nearly 650,000 loan modifications. During Q210 alone, BofA completed 80,000 modifications, including 38,000 trial modifications that were converted into permanent workouts under the Home Affordable Modification Program (HAMP).
If a modification does fail, BofA is putting an emphasis on selling the home through a short sale ahead of foreclosure. At REO Expo 2010, Matt Vernon, the short sale and REO executive at BofA said that the bank added 1,000 employees to the short sale staff and will “do everything possible to liquidate property prior to foreclosure.”
We’ve seen the trustee-sale stats slowing down, could it be a problem with processing, and a backlog of properties beginning to clog the system?
According to foreclosureradar.com, since January, 2009 there have been 15,471 SFRs and condos in San Diego County that have had their trustee sale, and gone back-to-bene. In the same time frame, there have been 14,313 new REO listings hit the MLS, so it appears the processing is keeping up – that’s only a 1,158 difference:
It looks like the servicers are able to handle the current workload, and that it’s purely the banks’ decision to stop foreclosing, and switch to loan mods and short sales instead.
The MLS shows that last month there were 3,288 total sales in San Diego County, with about 40% of them being bank-related (1,953 regular, 684 short-sales, and 651 REOs).
In the second half of 2009, there were 18,646 closings on the MLS, with 43% being bank-related .If buyers flock to the sidelines for the second half of this year, the lower-motivated regular sellers will likely cancel, and the REO and short-sales will likely be moderated by the servicers to maintain calm.
The current inventory count isn’t alarming, but it is growing. There are 9,444 regular (75%), 2,231 short-sale (18%) and 956 REOs (7%), or a total of 12,631 active listings in SD County currently.
I think we could average 2,000 – 2,500 sales per month for the second half, and still have an orderly market. Mortgage rates in the mid-4s will help keep buyers interested, and hopefully there will be some discounted quality homes for sale!
The amount of REO properties held by Citigroup reached $1.4bn in Q210, an 81% increase from the same time last year.
In the second quarter of 2009, Citigroup held $789m in REO in North America. The latest total is a 10% increase from the $1.2bn in North American REO totaled in Q110. The bank did not break down the total among the continent’s countries.
Citigroup defines its REO as the carrying value of all property acquired by the bank through foreclosure or other legal proceedings. Worldwide, Citigroup holds $1.6bn in REO, up 73% from a year ago.
Citigroup reported earnings of $2.7bn in Q210 after posting $4.4bn in the previous quarter.
Through its servicing arm, CitiMortgage, the bank continues work to reduce the amount of foreclosures on its balance sheet. According to the latest Home Affordable Modification Program (HAMP) report from the Treasury Department, Citi has converted 25% of its trial modifications into permanent status through May, totaling more than 34,000 modifications.
Inventory is rising, houses aren’t selling, yet list prices don’t seem like they are coming down much.
It sounds like the Big Standoff.
Let’s compare to this year to 2009, which had the hottest spring activity since 2005.
Here are the early July detached-listing stats for the La Jolla-to-Carlsbad region, compared to 2009:
July 1 to July 15
2009
2010
New Listings
249
263
New Pendings
100
89
Closings
84
84
Closings $$/sf
$399/sf
$390/sf
The 100 new pendings from last year have all closed, with 86 of this year’s 89 count still in escrow – but there are 141 marked contingent that will supplement the current pendings that fall out, and there will also be some late-reporters – let’s call it 89 for now?
Up until the end of June the 2010 stats comapred very favorably to last year, but now conditions look a little jittery – there are a total of 1,652 active listings currently, and only 241 closed in the last 30 days (and 84 in the last 15 days). I think we’ll see more signs of a slowdown, at least until sellers start lowering their list prices. Some aren’t far off, probably only 5% to 10%, but they’re getting stale quickly. Others need a 10% to 20% reduction just to get in the game.
Could we run out of buyers? Price will fix anything.
Here is the inventory trend of detached and attached active listings in San Diego County, with the counts taken in the middle of each month. Look at how the inventory was flying off the shelf in Spring, 2009, and has been relatively low since…well, at least until a couple of months ago.
The recent spike means the current list-price exuberance is a lot of hot air. There hasn’t been a rush to lower list prices yet, but sellers, it’s mid-July – it’s about time!
Hat tip to Schahrzad for her help with the numbers.
U.S. senators or Senate employees received 30 loans—far more than had previously been known—under a controversial lending program at Countrywide Financial Corp. that provided cut-rate terms to favored borrowers.
The information is contained in a letter sent to the Senate Select Committee on Ethics by Rep. Darrell Issa (R., Calif.), who has been spearheading the House Oversight and Government Reform Committee’s investigation into Countrywide’s so-called VIP mortgage program.
No specific loan recipients were named in the letter. But Mr. Issa’s letter said borrowers on a dozen loans listed their place of employment as the office of “Senator Robert Bennett.” Available public records don’t indicate that Sen. Bennett, a Utah Republican and member of the Senate Banking Committee, received a Countrywide home loan.
Sens. Christopher Dodd (D., Conn.) and Kent Conrad (D., N.D.), have previously been identified among the high-profile individuals who received such loans. Both senators have denied wrongdoing. Until the Issa letter, no other senators or their staff members had been linked to the VIP loan program.
The VIP program operated during the housing boom earlier this decade, often writing mortgages with terms more favorable than those available to the general public. An estimated 28,000 loans were made, mostly to private parties such as Countrywide employees or their friends and relatives.
The House Oversight panel, where Mr. Issa is the ranking Republican member, is probing whether such loans were issued to public officials in an attempt to influence them. Last year, the committee subpoenaed VIP loan records from Bank of America.
In his letter dated July 13, Mr. Issa wrote that on seven loans not tied to Mr. Bennett’s office, the borrowers listed their place of employment as “U.S. Senator.” Another 11 listed the “U.S. Senate.” In response to questions, a spokesman for Mr. Issa said the House committee didn’t receive the names of the borrowers from Bank of America.
More than one loan could have gone to the same person, such as a mortgage and a separate home-equity line of credit. Mr. Conrad received four Countrywide loans, a spokesman for the senator said. Mr. Dodd reportedly received at least two. Their loans were presumably included in the 30.
Mr. Issa’s efforts to investigate the VIP loan program were stymied for a time by the unwillingness of the House oversight panel’s chairman, New York Democrat Edolphus Towns, to issue a subpoena to Bank of America for the VIP program records.
The Securities and Exchange Commission has a pending civil fraud suit against three former top company executives, including longtime Chief Executive Angelo Mozilo. The three have denied wrongdoing, and a trial is scheduled for October in a Los Angeles federal court.
Short sales have to be the best device for those determined to kick the can down the road – the processing delays are already legendary, and many end up in the black hole of goo.
IF the servicer gets pressured about making a decision, they can resort to ‘the big start-over’, and sell the loan to another entity.
Eric Wolff of the North County Times touches on it here, and below you can see how the closed short sales have been increasing this year:
After the vaunted ARM-reset chart, the Great Recession, unemployment through the roof, and state and local governments as broke as ever, many thought (including JtR) that by now we’d be in a bank-directed-sales environment only, with nothing but REOs and short sales.
But with the REO listings dwindling, the regular sales are enjoying a healthy resurgence – May and June regular sales were as high as they have been in a year:
If the banks’ intention is to make the liquidation of property as excruciating as possible in order to drag it out for years, they have found the magic formula – spit out a few trustee sales, and direct their defaulting borrowers to loiter around the short-sale bin. This might take a while?
Hat tip to Susie for sending along this article from TIME/CNN, full of classics:
“The whole market has slowed down anywhere from 30% to 40% across the country,” Not in San Diego, where we’ve seen YOY and MOM sales be virtually unchanged.
“If you are trying to be an opportunistic seller and you don’t have to sell, there’s no reason to have it on the market right now.” says Trulia’s Shuman. “The demand is not there.” Huh? Not in SD, where there is plenty of people willing to buy today if they could find a reasonably-priced house.
“If your home has been on the market for four months and it hasn’t sold, you have to adjust your price.” Four months? It’s the middle of July, better make it four weeks, or less!
“I definitely think we have more inventory,” she says. “But everything will always sell for a price.”Now we’re talking!
