Hat tip to JG!
Bank of America has been “working on their system”.
In July, they conducted 258 trustee sales of properties throughout San Diego County – either sold to third parties or back-to-bene.
Yesterday they blew out 79 properties in one day!
There are several notes:
1. They were pricing them very aggressively.
In July, they sold 33% of their trustee sales to third parties. Of the 79 properties offered yesterday, 72% were purchased by third parties. Yesterday’s properties also sold for an average of $48,000 over the opening bid, which is phenomenal when the average price was in the $200,000s. BofA was looking to dump some properties!
2. The big buyers must have been tipped to have that many third-party sales – B of A only had nine trustee sales the day before. But if the volume continues, the mom-and-pop bidders will be back – most have retreated due to the few properties available, and how the big bidders have run up the prices/squeezed the margins, in order to dominate the environment.
3. If they continue, it’ll create some buzz, right as the market is poised to go to sleep for the rest of the year. B of A has 510 properties scheduled for next week!
4. These properties will be selling for retail, or retail-plus.
A. Flippers will do the 3-day makeover and list for top dollar – and get it. Buyers, especially first-timers, want to buy a cleaned-up, renovated home, and close in 30-45 days.
B. The back-to-benes will be offered at retail, even if they aren’t fixed up. They haven’t been giving away any of their REOs lately, and thankfully, everyone loves a bank deal.
C. Some day, people will question the media’s insistence that foreclosures are bad. It’ll probably take the other servicers to notice how it’s working for B of A, and do the same with their portfolios. If they manage it properly, they could create buzz plus momentum, and some true market clearing.
5. Only six of the 79 were in our NSDCC, but there are another 165 on their auction list, scheduled over the next couple of months.
Let’s hope it continues?
Foreclosures for everyone!
Properties for $248,000ish? Now you’re talking!
I have heard that at least in San Diego B of A is bringing litigation matters in house and is cutting back on hiring outside law firms.
Someone in that machine of inefficiency might be trying to implement some cost savings and raising some cash.
There were so many yesterday because they had one of their mega ballroom auctions. I went to one of these auctions in the Bay Area. It seems to work pretty well for the lenders. Unlike the traditional trustee sale, the ballroom auction works a lot like the regular auction.com REO sales. The auctioneer is in control of the price. If the open bid is $208,000, he won’t let you bid $208,000.01. He will say “Do I hear $210,000?” If you raise your card you bid $210,000. Even then, many of these have a hidden reserve bid so they might go back to the beneficiary in the end.
The price of BofA stock has dropped nearly 45% in the last six months. Insiders must know this bank is having serious problems.
“The big buyers must have been tipped”…that was my very first thought as I read your opening sentence. But I don’t mind….they’ve got to move that python through the snake and I don’t care at this point how they do it.
BofA has to get these bad assets off their books because the next time they are reviewed if they have all these bad properties they could be in even worst position.
Looks like they have been trying to hold out thinking the economy will get better and then the problem would self correct as homeowner’s home prices would increase with the “never to be seen recovery”.
But since there looks like to be a double tip, they see the writing on the walls and need to liquidate NOW.
Prices are going to go down for the rest of the year, unless the Fed has QE3 and inflates the economy.
Reminds of me of that Monty Python sketch with the guy exploding from eating too much…that’s the US economy and the food is the debt.
According to JG, approved short-sales were what got foreclosed, which really makes you wonder what’s going on. He thinks they are in survival mode.
They’re acting desperate.
they had one of their mega ballroom auctions.
You’re right, auction.com had an auction date yesterday, so they must have been successful. There is no doubt that a big auction company could really have impact if you had sellers willing to sell with no reserve. It’ll be interesting to see how many close?
The list:
https://www.bubbleinfo.com/wp-content/uploads/2011/08/Recontrust-79-trustee-sales-Aug-5.pdf
I bought one of those sold at the Sheraton Friday. Decent deal, I thought the bidding was pretty aggressive overall.
CM mentioned this:
“7.According to JG, approved short-sales were what got foreclosed, which really makes you wonder what’s going on. He thinks they are in survival mode.
They’re acting desperate.”
Sorry, Jim, I’m just catching up with posts from the weekend and this really threw me for a loop.
How does JG know that these were short sales which were already “approved”? Were they ALL indicating as such on their listings? Or does JG have personal knowledge that the banks were working on deals with other buyers via short sale, but simply bailed on them for the auction?
Does this mean “bank approved short sale” now actually means the bank has actually thought about it, but is not committed to the idea? YIKES!
Also there seems to be a lot of discussions online about SB 458 and the second lienholders expecting to demand more from the deal to approve the short sale. This makes no sense to me–if they don’t approve the short sale, don’t we expect the first to foreclose? And what is the likelihood the second will pay off the first to protect their secondary interest–I would think nearly none. So they won’t get anything either way…. Unless the borrowers (read “home owners”) are so desparate to avoid foreclosure that they will cough it up? Or are the buyers just so enamored with short sales they are giddy to get it at all costs?
It just gets stranger and stranger out there….
JtR response: JG is a realtor, and we were discussing some of the strange antics by BofA. He had a couple of his own approved short sales get foreclosed, which is part of the landscape but you would think BofA has a better grip on things, but they don’t.
Their REO policies are a moving target too, in particular they have gone to cheapest bid only for repairs, whether it makes sense or not. The communication isn’t improving either, which leaves participants guessing what they might do next.
I didn’t think of the ballroom auction being the cause, so I jumped the gun on this post.
I fished IRE’s comment out of the spam bin, and the system posts it in the same order it came in, even though I didn’t see it until hours later.
We still think BofA is in trouble:
Bank of America badly underestimated how much it would have to pay Fannie Mae and Freddie Mac for troubled home loans.
In a filing Thursday, Bank of America said the cost of buying back mortgages from Fannie and Freddie is already as high as high as $7.8 billion.
Earlier this year it had estimated that it would only have $3 billion of additional claims.
The bank has been buying back mortgages that didn’t live up to the contractual representations and warranties it made when selling the mortgages. Many of them were originated by Countrywide Financial, the lending business Bank of America bought in 2008.
“Notably, in recent periods we have been experiencing elevated levels of new claims, including claims on default vintages and loans in which borrowers have made a significant number of payments (e.g., at least 25 payments), in each case, in numbers that were not expected based on historical experience,” the bank said in an SEC filing.
“Additionally, the criteria by which the [government-sponsored enterprises] are ultimately willing to resolve claims have become more rigid over time,” the bank said.
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ZH thinks it’s over for BofA, and CFC will be taken over by the Fed:
http://www.zerohedge.com/news/bank-america-defaults-risk-soars-highest-june-2009-jumps-10-overnight
A big hedge fund, Tepper’s Appaloosa, has just dumped all it’s financial holdings of BofA stock –17 million shares–and the stock is down nearly 10%.
So ZH is probably right.
They also sold of Wells and significantly reduced their Citi holdings.
Hold on to your seats!
Any idea if any of these foreclosed approved short sales were already contingent?