Slow-Motion Drip

by | Nov 1, 2011 | Foreclosure Count, REO Counts, Thinking of Buying?, Thinking of Selling? | 7 comments

Someone asked, “JtR, why do you keep posting stories about the can-kicking programs being employed by the government?”

The answer is because the media and government keep insisting that we can’t handle a flood of foreclosures, and that together, they’ll do whatever is necessary to protect from what they think is certain peril. The media is complicit in this charade, because they won’t search out the truth – that the majority of people in this country pay their bills, and are tired of the coddling. 

It is important information for those potential sellers and buyers who are waiting for “the mess to be over” before proceeding.  If the government/media/banks are going to do whatever is necessary to drag this “mess” out for years, participants should devise their strategies accordingly.

Another reminder, from HW:

The housing market faces several more years with 800,000 to 1 million new foreclosed properties per year, according to Rick Sharga, an executive vice president with Carrington Mortgage Services.

Sharga recently left RealtyTrac, where he helped build a network that tracked foreclosure filings across the country. Recently, analysts at Bank of America Merill Lynch estimated REO sales would peak until 2013 when nearly 1.5 million properties would be sold.

According to RealtyTrac, there have been 8.9 million homes lost to foreclosure since 2007, the height of the credit crisis.

Sharga said based on lender behavior, he doesn’t see a spike happening, rather a slow, steady burn in order to spare home prices from further reductions. Today, roughly 4 million homes sell per year. If 1.5 million REO sold, that would be almost 40% of the market, which would be double the current market share of these properties.

“I think it’s less likely that we’re going to see a ‘peak’ year in REO sales that looks dramatically different than what we’ve been seeing over the past few years. This is partly due to relatively weak demand, partly due to what I’d call ‘inventory control’ being executed by the lenders and servicers, and partly due to the fact that foreclosure processing, evictions and redemption periods have all become extended, and often appear to be in a state of flux,” Sharga said.

The largest delay came when servicers were found to be improperly foreclosing on homeowners last year. RealtyTrac said the delays, investigations and ongoing attorneys general settlement talks pushed more than 1 million foreclosures that were supposed to occur in 2011 to 2012.

According to Lender Processing Services, mortgages facing foreclosure are delinquent an average of 611 days. Once a foreclosure is initiated, Sharga said it can take as long as 400 days to complete. So, he said, a loan entering foreclosure in December 2011 won’t hit the market as an REO until January or February 2013.

“Sales volume will be high in 2012, 2013 and probably 2014 as well,” Sharga said. “But it still seems more probable that we’ll see consistently high – yet closely managed – numbers of these sales over several years than it is that we’ll see a huge spike followed by a precipitous drop.”

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So I guess we can expect 1,000,000 or so foreclosures per year across the country until done, with no flood of trustee sales on the horizon. Combine those with the baby-boomer liquidation, which is already underway, and we can expect a steady stream of “under-improved” properties coming to market – which will keep a throttle on prices.

In October, there were 771 properties foreclosed in San Diego County, which was very similar to September’s 755.  In NSDCC there were 28 SFRs foreclosed, continuing the usual average of one a day – it’s a little too uniform, isn’t it? 

For those hoping for more well-priced new listings, it is a frustrating wait.  Here are three of the best foreclosed in October:

Default Notices – September

by | Oct 11, 2011 | Foreclosure Count, REO Counts, Spring Kick | 1 comment

In August we saw a spike in NODs, mostly due to Bank of America’s increased output.

It was mentioned here that last month’s NODs appeared to be slowing.  But I just figured out that the NOD reporting by foreclosureradar.com runs about 10 days behind – even though they report the results of trustee sales the same day.  Here are the September NODs – and it appears that we’re back to “normal”, after the August bump that was driven mostly by Bank of America. (revised from earlier today)

 

Of course it doesn’t mean much unless they are going to actually foreclose on defaulters, which lags behind by at least four months.  Lately, the completed trustee sales aren’t on the rise:

Hopefully we’ll be in for a big spring kick, led by BofA!

SD Foreclosure Graphs

by | Oct 8, 2011 | Foreclosure Count, REO Counts

Yesterday’s graphs from foreclosureradar weren’t the most recent; but these are the latest available.  I think we’ll see an increase in NODs for the 3Q11 – those totals should be out soon:

San Diego County Filings

The banks are giving plenty of latitude these days:

San Diego County Average Free Rent, days (in green)

The cancellations look like they are getting back to “normal” on the quarterly chart:

San Diego County Trustee-Sale Results, Quarterly

But over the last few weeks, it looks like cancellations, and 3rd-party buys, have been bouncing around lately:

San Diego County Trustee-Sale Results, Weekly

What You Resist, Persists

by | Oct 7, 2011 | Foreclosure Count, Market Conditions, REO Counts | 2 comments

Hat tip to those who sent in this article from YahooFinance, but scroll down to see local impact:

As the foreclosure backlog continues to build up, delinquent borrowers are spending even more time in their homes without making mortgage payments.

Once borrowers start missing payments, they spend an average of a year and nine months, or 611 days, in foreclosure before banks repossess their homes, according to LPS Mortgage Monitor. That’s more than twice as long as three years ago, when the average was 251 days. Earlier his year, the average was 523 days.

“The number of defaults in the pipeline has been huge and we had more problem loans than ever before,” said Herb Belcher, who supervises analytics for Lender Processing Services (LPS), which provides mortgage industry information and analytics to big banks.

With so many bad loans, servicers have had to prioritize which ones they can deal with and which ones to push aside.  “It’s like your boat has all these holes in it and is taking in water. You have to plug up the worst holes first,” said Belcher.

The bottlenecks are particularly severe in judicial states where the foreclosures are processed through the courts, he said. In non-judicial states, where trustees handle the cases, the average foreclosure is six months shorter.

Fannie Mae and Freddie Mac, which account for the majority of all mortgage lending these days, have been actively lobbying their industry partners — the servicers and attorneys who handle the foreclosure process — to either quickly get paperwork filed and push defaults through the system or put borrowers into a foreclosure prevention program, said Belcher.

The industry has gotten better at dealing with the deluge; it has hired staff and refined procedures to improve efficiency. But a return to more normal processing times will take time given the enormous backlog.

There were more than 4 million homes either in foreclosure or 90 days or more late with payments in August. Many of the new delinquencies are actually repeats: About 75% of the borrowers who fell a month behind in payments in August had missed payments before and then caught up — only to fall behind again.

On the plus side, the percentage of new seriously delinquent loans (90 days or more behind on payments) whose borrowers were up-to-date on payments just six months earlier has dropped to 1.4% from a peak of 2.9% in early 2009.

Many of those borrowers suffered through severe financial reversals, such as a job loss. Foreclosure and unemployment rates generally move in lockstep with each other.

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On August 3, 2010, we ran this post which counted the bank-owned properties in SD County.

Here are the counts of SFRs and condos in SD County, owned by Fannie and Freddie:

It looks pretty orderly to me, for a county with over 3 million people. 

The media insists on including the most dramatic quotes they can find, scaring people into making crazy decisions – like renting REOs, instead of selling them.

The banks, servicers, NAR, etc. keep standing by hoping somebody else comes up with a solution, other than doing what it right – which is to ramp up the foreclosures, and resolve this mess!

San Diego County Average Free Rent, days (in green)

Here is the same chart with percentage change over the last year:

San Diego County Average Free Rent, days (in green)

REO Owner Aug. 2010 Oct. 2011
Fannie
899
813
Freddie
334
234
Town or Area Zip Code NOD NOT MLS sales, last 12 months
Cardiff 92007 6 19
73
Carlsbad NW 92008 24 42
166
Carlsbad SE 92009 60 94
498
Carlsbad 92010 22 32
143
Carlsbad SW 92011 21 34
192
Del Mar 92014 19 26
146
Encinitas 92024 56 72
364
La Jolla 92037 29 39
267
RSF 67+91 16 37
199
Solana Bch 92075 13 26
68
Carmel Vly 92130 33 60
402
Totals NSDCC 299 481
2,518

We’ll expect that a couple of these folks will get their loan mod, a few others will get their yearly bonus, gift or inheritance to get current, and some will get gifts from the FedGov – see below.

P.S. For comparison, during the previous 12 months, there were 2,541 SFR sales on the MLS, while the tax credit was in full swing.

From HW:

The Federal Reserve’s policy of keeping interest rates low to spur lending hit a barrier in the recovery with home prices falling and underwriting guidelines keeping borrowers from refinancing, said Eric Rosengren, president of the Federal Reserve Bank of Boston.

With that in mind, the Fed Bank CEO said he supports policies that would allow homeowners who are underwater on their mortgages to refinance their loans. “Clearly getting more money into the hands of homeowners who spend it could help to fuel GDP growth,” he said. “This would reduce one of the impediments to a more significant effect from the monetary policy actions taken to date.”

More on August’s NOD Blip

by | Sep 26, 2011 | Foreclosure Count, Market Conditions, Mortgage News

Hat tip to SM for sending this along, from Yahoo.com:

It’s no secret that Bank of America wants to put its mortgage-related woes behind it. But it appears that a key $8.5 billion settlement with large investors is playing a role in pushing many more people into foreclosures.

The number of homes across the country that received an initial default notice — the first step in the foreclosure process — jumped 33 percent in August from July, the foreclosure listing firm RealtyTrac reported last week. It was the largest monthly increase since August 2007, right after the housing bubble had burst.

Now a preliminary analysis reveals the largest escalation of foreclosures came from Bank of America. Just in California, default notices sent by Bank of America soared 96 percent in August from the previous month.

The dramatic rise is particularly evident in certain California towns and cities. For instance, notices surged 95 percent in Fresno and 76 percent in Sacramento.

Bank of America says that taking action on its foreclosure pipeline will set the stage for a housing market recovery. However, consumer advocates say Bank of America and the other lenders are ramping up foreclosures without cleaning up shoddy paperwork practices, which led to a moratorium in foreclosures last October.

“Bank of America has a ticking time bomb in its books and it needs to show investors that it is moving,” said Ira Rheingold, an attorney and executive director of the National Association of Consumer Advocates.

“‘Does that mean it has improved its practices?’ No. But Bank of America is in a desperate place,” said Rheingold.

On June 29, the Charlotte, N.C. bank struck an $8.5 billion settlement with a group of large investors– including Pimco, the New York Fed and Blackrock– who claimed the bank had sold them poor quality investments based on faulty mortgages. The settlement is still subject to court approval; a decision is expected in November. Several other investors and homeowners have also filed objections with the court to block the settlement.

Bank of America spokesman Richard Simon said the bank’s increased foreclosure actions had nothing to do with the settlement. Instead it stems mainly from a return to more timely filings on new defaults. He also noted that the bank has improved quality controls and was moving homes into foreclosure “only after all other options with homeowners have been exhausted.”

Clearing the backlog of foreclosures and defaulted loans is a key part of the terms of the settlement. Bank of America has to reduce the number of risky mortgage loans and find third-party companies that can help speed up the process. This includes helping homeowners modify loans or herding defaulted loans into foreclosure sales.

The bank’s actions to start clearing the backlog started from the date the settlement was signed, said Scott Humphries, a partner at law firm Gibbs & Bruns, which represented investors in the settlement. “It does not have to wait for court approval,” he said.

Bank of America is hopeful that the settlement will be approved, as it’s a key part of the process to enable management to focus on other issues.

The bank’s stock has been decimated this year — falling more than 50 percent since January. That’s because Bank of America has been hit by a spate of lawsuits from large investors, the government and corporations who say the bank should either buy back the billions of dollars of faulty mortgages or pay damages. Most of the mortgages were written by Countrywide Financial Corp., the country’s largest mortgage lender which Bank of America bought in 2008.

On the national level, there wasn’t any immediate reason, other than the Bank of America settlement, to explain the spike of defaults in such places as Tallahassee, Fla., where an additional 81 percent of homeowners received default notices. In Carson City, Nev., default notices rose by 185 percent.

Consumer advocates say there aren’t any signs that the shoddy paperwork practices have been cleaned up even as foreclosures are being sped up.

“Bank of America will do the exact same thing now, except faster,” said Don Barrett, partner at the Barrett Law Group, which is representing homeowners who seek to block the settlement. Barrett is a former tobacco lawyer who represented cases for attorneys general of several states against the tobacco industry.

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Is BofA continuing to surge? Here are the monthly counts of NODs in SD County and statewide (September’s count is month-to-date):

Month SD NODs SD BofA NODs CA NODs CA BofA NODs
July
1,327
219
18,308
2,989
Aug
2,213
957
31,977
13,064
Sept
853
352
11,751
4,536

BofA’s NOD Increase in August

by | Sep 17, 2011 | Foreclosure Count, North County Coastal, REO Counts | 4 comments

The mainstream media and blogs were buzzing this week about the big increase in BofA’s NOD filings last month.

Let’s examine the local NOD and NOTS counts to see if the foreclosure waters are rising. These are the monthly totals of notices/sales for all property types in SD County filed by all lenders, with BofA’s total right below (and NSDCC counts for SFRs only):

NOD Filings May June July Aug Sept
SD County-All
1,476
1,456
1,353
2,235
472
SD County-BofA
268
369
523
1,361
231
NSDCCSFR-All
56
76
74
121
17
NSDCCSFR-BofA
10
3
6
43
3
NOTS Filings May June July Aug Sept
SD County-All
640
666
760
1,152
362
SD County-BofA
288
162
300
401
62
NSDCCSFR-All
38
36
49
64
15
NSDCCSFR-BofA
17
10
13
19
2
Trustee Sales May June July Aug Sept
SD County-All
582
480
491
585
252
SD County-BofA
236
147
136
205
111
NSDCCSFR-All
18
20
25
30
13
NSDCCSFR-BofA
4
2
3
8
1

Looking at September’s month-to-date totals, the new-notice issuance is cooling off already. It doesn’t really matter how many notices they file, unless they actually start forclosing on people. We’ll keep an eye on them.

Delinquencies and Defaults

by | Aug 22, 2011 | Foreclosure Count, North County Coastal, REO Counts | 5 comments

Whatever happened to investigative reporting? 

Today’s story on cnbc.com about rising delinquencies includes the same lightweight quotes from another ivory-tower guy, and if you just read the headline it sounds like the sky is falling again. In the text it says that the second-quarter delinquency rate increased 0.12% from the previous quarter, but is still down 1.41% from the same period a year ago. 0.12% – that’s it?

They never bother with two important points:

1.  The servicers tell you that you need to go delinquent if you want to loan-mod or short-sell.

2.  The servicers may be carefully regulating the flow of who gets reported as delinquent.

If the policy is to keep kicking the can down the road, it doesn’t matter why or how many people go delinquent, because the servicers can just drip them out as needed.  But it would be nice if the MSM can look into it a little further than just including this opinion (not fact) from the article:

The data suggest that persistently high U.S. unemployment rate is making it harder for people to keep up on their mortgage payments, and offer a grim outlook for a housing sector.

“Mortgage loans that are one payment, or 30 days, past due are very much driven by changes in the labor market, and the increase in these delinquencies clearly reflects the deterioration we saw in the labor market during the second quarter,” Brinkmann said.

We need that guy from Yahoo Sports to cover housing!

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Are delinquencies turning into SFR defaults around North San Diego County’s Coastal region?  On a quarterly basis, it looks like more of the same – they are foreclosing on roughly one SFR per day between Carlsbad and La Jolla:

Quarter NODs Trustee Sales
2Q10 269
109
3Q10 245
90
4Q10 238
71
1Q11 225
117
2Q11 202
59

Here’s how it looks on a monthly graph:

We got excited in 1Q11 thinking that the servicers were increasing the foreclosure rate, only to be disappointed in 2Q11. It looks too uniform and regulated to me.

Bankers Contolling Pace

by | Jul 25, 2011 | Foreclosure Count, Market Conditions, REO Counts, Sales and Price Check | 6 comments

ocerenter noted two posts ago – could the foreclosure crisis be turning a corner?

I join in his skepticism, due to the numerous ways the data can be manipulated – primarily, we’ll never know how many defaulters are not being foreclosed.  The bankers can just let people live for free if they want, and the public won’t know.

In San Diego County, there are more REOs and short-sale closings, than properties being foreclosed (based on MLS vs foreclosureradar stats):

Time Period REO + SS = REO & SS Totals Trustee sales Diff
2010 7,372 6,332
13,704
11,850
 +1,854
1H11 3,844 3,250
7,094
5,588
 +1,506
2Q11 1,999 1,710
3,709
2,571
 +1,138
June 672 570
1,242
769
 +473

If anything, the liquidation flow indicates that the bankers have become better at managing the pipeline – as long as they keep it around 1,000 properties per month. At least they are providing some inventory!

But what about the shadow inventory? Will the underwater folks provide an unmanageable event for servicers in the future? Not as long as selling about 1,000 properties per month is acceptable to the bankers and investors. Defaulters will just have to wait in line!

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