Reversing a four month declining trend, Notice of Default filings rose 6.9 percent month-over-month in California, while Notice of Trustee Sale filings dropped 13.8 percent from the prior month.
Foreclosure filings year-over-year show only mild change, with Notice of Default filings down 3.3 percent and Notice of Trustee Sale filings slipping just 1.4 percent from January 2010.
Foreclosure sales skyrocketed from December, with 51.5 percent more sales Back to Bank and 52.8 percent more properties purchased by Third Parties, typically investors. Cancellations were up as well, rising 12.4 percent this month as compared to last which was the first time in six months that cancelations increased month-over-month.
In San Diego County, the number of trustee sales have picked up nicely, giving hope to buyers that there could be additional well-priced inventory in the coming months:
The number of local SFRs on the auction-list:
Town or Area
Dec ‘09
Sept ’10
Today
Cardiff
21
23
17
Carlsbad
204
161
138
Carmel Valley
43
40
40
Del Mar
14
11
5
Encinitas
98
69
55
La Jolla
53
29
28
RSF
21
22
20
Solana Beach
15
19
14
NSDCo.Coastal
469
374
317
The current inventory is picked over and most potential buyers are just waiting for new meat – keep ’em coming!
This was the year thousands of U.S. homeowners with option adjustable-rate mortgages were supposed to default as their payments spiked. Low interest rates and a surge of early delinquencies mean the numbers probably won’t be as bad as forecast, softening the blow to a housing market where prices have resumed falling.
Monthly payments on option ARMs reset after an initial low- rate period, usually five years, and researchers at CoreLogic Inc. in Santa Ana, California, estimated in 2009 that such recasts would peak at 54,000 a month in August of this year. In a 2006 cover story in BusinessWeek magazine titled “Nightmare Mortgages,” George McCarthy, a housing economist at the Ford Foundation in New York, compared the looming resets to a neutron bomb.
“It’s going to kill all the people but leave the houses standing,” he said at the time.
What he and other analysts didn’t anticipate was that so many option ARMs would go bad before resetting, and that interest rates would stay low enough to minimize the impact of the adjustments on borrowers who are making their payments. Still, a model developed by JPMorgan Chase & Co. analysts predicts that 70 percent of remaining option-ARM loans that were bundled into bonds will eventually default.
About $600 billion of the loans were made from 2005 through 2007, according to industry newsletter Inside Mortgage Finance. Of those packaged into bonds, some 20 percent have been liquidated at losses to investors, and almost half of the remaining ones are at least 30 days delinquent, in foreclosure or have been seized by lenders, according to data from JPMorgan.
“It’s not that option ARMs weren’t a bad way to finance homes, it’s just that the disaster already happened before the resets,” McCarthy said in a telephone interview last week.
Hat tip to JimG for sending this along, frombloomberg.com:
Merscorp Inc., operator of the electronic-registration system that contains about half of all U.S. home mortgages, has no right to transfer the mortgages under its membership rules, a judge said.
U.S. Bankruptcy Judge Robert E. Grossman in Central Islip, New York, in a decision he said he knew would have a “significant impact,” wrote that the membership rules of the company’s Mortgage Electronic Registration Systems, or MERS, don’t make it an agent of the banks that own the mortgages.
“MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not supported by the law,” Grossman wrote in a Feb. 10 opinion. “MERS did not have authority, as ‘nominee’ or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal.”
“An adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its member/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States,” Grossman wrote. “It is up to the legislative branch, if it chooses, to amend the current statutes to confer upon MERS the requisite authority to assign mortgages under its current business practices.”
“By MERS’s own account, the note in this case was transferred among its members, while the mortgage remained in MERS’s name,” Grossman wrote. “MERS admits that the very foundation of its business model as described herein requires that the note and mortgage travel on divergent paths.”
The judge said that the membership agreement wasn’t enough to assign the mortgage and that to do so the lender would have to give power of attorney or similar authority to MERS.
Although California home sales overall dipped during 2010, the more high-end home sales — those sold for $1 million or more — climbed upward for the first time in five years.
Last year, 22,529 homes sold for $1 million or more, up 21% from 18,621 in 2009 and the highest since 2008, when 24,436 homes sold for $1 million-plus, according to San Diego-based DataQuick Information Systems.
In 2005, million-dollar sales peaked at 54,773, after which they declined each year through 2009.
DataQuick suggests a reason for the increase may be because certain segments of the economy improved in the last year and high-end home shoppers went bargain hunting.
“Prestige home buyers respond to a different set of motivations than the rest of us,” said DataQuick President John Walsh, in a press release. “Their decisions are less dependent on jobs, prices and interest rates, and more on how their portfolio is doing.
The jump in $1 million-plus home sales in 2010 compares with a 9% year-over-year drop in total home sales, including all price levels.
“When the financial world was full of uncertainty a couple of years back, and the jumbo loan market dried up, luxury sales plummeted,” he said. “As the economy started its top down recovery, some wealthy buyers went looking for a bargain.”
There haven’t been that many higher-end REOs around Carmel Valley – in the last four years there have only been 48 million-dollar houses foreclosed in 92130. In the same time period, there have been 659 MLS sales over $1,000,000 in the CV:
The first month of 2011 was unkind to home prices, at least as measure by the median price per square foot of resale homes sold during the month. From December to January, this measure of home prices declined by 3.0 percent for detached homes, 7.2 percent for condos, and 4.5 percent in aggregate.
As I often note, the condo series is quite volatile so these big single-month moves can be safely ignored. But the detached home median price per square foot has typically given a fairly good read on actual price changes going on in the market, so the 3.0 percent decline there suggests that market pricing was indeed lower on the whole.
In fairness, January is a seasonally weak month for home prices, but the above chart shows that prices have been on the decline since the assorted stimulus efforts started to fizzle out last summer.
Clickhere for more of Rich’s commentary and 5 other graphs.
