by Jim the Realtor | Mar 3, 2014 | Foreclosures/REOs, Jim's Take on the Market, No-Foreclosure as Banking Policy |
Having over eight years’ worth of blog posts means all types of kooky things happen regularly – usually regarding comments left on old stories.
Yesterday’s comment-du-jour went back to June, 2011, which caused me to read a few other comments of the day.
Reader LM left this:
Bernanke live press conf: We have told the banks to handle their REOs…..long pause………..in an economy-supportive way.
Oops. We he was GOING to say was “we have told the banks not to flood the market with REOs.”
Here is the link to the actual speech, with Bernanke’s quote on the last page:
http://www.zerohedge.com/article/full-transcript-ben-bernankes-i-have-no-idea-why-economy-will-get-better-it-will-speech-and-
Let’s look back at the foreclosure history beginning in 2011. Sure enough, LM called it – foreclosures in California dropped off the table:
Thanks Uncle Ben – and rots of ruck to you!
by Jim the Realtor | Feb 15, 2014 | CA Homeowners Bill of Rights, Foreclosures/REOs, No-Foreclosure as Banking Policy |
The hedgies got fired up this week over RealtyTrac’s report of California foreclosures rising 57% last month – the post is featured at the top of their front page, and has great comments: www.zerohedge.com.
At first glance, it would support my theory that banks deliberately turned off the foreclosure machine, and have merely started it up again:
Foreclosureradar.com’s California graph shows the same Y-O-Y increase:
But the CA Homeowners’ Bill of Rights had just been implemented in January, 2013, causing a drop in notices issued while servicers made adjustments. Last month’s number of California foreclosure notices is similar to every month since January 2013.
For locals, here are the San Diego County notices:
It’s likely that the banks/servicers have thrown every defaulter into some sort of loan modification – or if they didn’t fit, just let them lie. With a casual handling of defaulters, expect that borrowers will drift in and out of the foreclosure process as they enjoy a pay-if-you-feel-like-it policy.
Expect the foreclosure-notice data to be jumbled from now on, and not indictative of much really. What counts is the number of people actually getting foreclosed – here are the San Diego results of trustee sales for the last three years:
The number of properties actually foreclosed has dropped off the table in the last 12 months – in 4Q13 we averaged 150 foreclosed homes per month in a county of 3 million people. We will survive that – heck, in the previous fourth quarter (4Q12) we had triple the number of foreclosed properties, and the market took off in a frenzy!
by Jim the Realtor | Dec 3, 2013 | CA Homeowners Bill of Rights, No-Foreclosure as Banking Policy |
Reader avgjoe took exception to the whole idea of foreclosures in this environment. Yesterday he said,
“There are still people around me getn a free ride after 5 years. The banks have limited inventory by not foreclosing on people hoping for a bigger payday. Lets get the truth to the readers.”
Everyone pointed to the CA Homeowners Bill of Rights as the cause for the drop in foreclosures. The new law made the foreclosure process more stringent on lenders, and it contained the provision of granting attorney fees to any homeowner who felt the need to sue, whether they won or not:
https://www.bubbleinfo.com/2013/04/16/blaming-the-ca-hbr/
Whether it was actually the CA HBOR that caused the foreclosure process to screach to a halt, or just a handy excuse, we will probably never know. But lenders must be doing everything they can to keep people in their houses – the unemployment rate hasn’t changed much, and incomes aren’t rising.
How else can you explain why foreclosures have dropped off the table?
Third-Quarter Counts:
| 3Q-Year |
Trustee-Sales Completed |
Short-Sales Completed |
Total |
| 2009 |
3,776 |
1,186 |
4,962 |
| 2010 |
3,460 |
1,651 |
5,111 |
| 2011 |
2,525 |
1,735 |
4,260 |
| 2012 |
1,599 |
2,260 |
3,859 |
| 2013 |
493 |
892 |
1,385 |
The drop in short-sales looks like the smoking gun.
According to Zillow, 21% of San Diego homeowners who have a mortgage are underwater, and are over-encumbered by an average of 36.8%, or $124,526:
http://www.zillow.com/blog/research/2013/08/28/negative-equity-rate-falls-for-5th-straight-quarter-in-q2/
The 21% equals 97,422 homeowners in San Diego County who are underwater, and only 892 of them, or 0.1%, completed a short sale in 3Q13 with the end of debt-tax forgiveness barreling down on us??
I’m with avgjoe in thinking that the lenders have conveniently adapted a policy of non-foreclosure, and are hiding behind the CA HBOR. They are putting no pressure on deadbeats to pay, otherwise the short-sale counts would be much higher. Those who are the furthest underwater have the least reason to pay, and banks have the most to lose – no surprise that the banks want to limit their losses.
The CA HBOR was announced in summer of 2012, and has been a law for almost a year. The banks have had plenty time to adapt to the new law, and yet the foreclosure notices keep dropping – did most defaulters just go back to making their payments?
The banks own this country, and manipulating the system has become acceptable. Isn’t it a possibility that the market rebound has been so good that banks just decided to not adding more distressed inventory, and keep the good times rolling – at least for now?
by Jim the Realtor | Sep 6, 2013 | Foreclosures/REOs, No-Foreclosure as Banking Policy, Shadow Inventory |
From DSNews.com:
As home prices improve and headlines spell out recovery, those on the ground in housing markets across the country are encountering a new threat: “zombies.”
These so-called “zombie” foreclosures take place when a bank initiates foreclosure on a property but then abandons the process, leaving the property in a sort-of no-man’s land—vacant but not for sale.
According to RealtyTrac, there are about 167,000 properties nationwide that fall into this category. In addition, the company says there are hundreds of thousands of unlisted REOs and even more properties winding through lengthy judicial foreclosure procedures.
“Unlisted foreclosures and bank walkaways used to be extremely rare, but they have mushroomed recently, ballooning into a large number of homes stuck in foreclosure limbo, sometimes for years,” RealtyTrac stated in its most recent issue of Foreclosure Report News.
JtR: Click on the link above to read about some smug REO brokers.
Bank of America has 23,966 foreclosure “zombies,” the most held by any bank, according to RealtyTrac.
Wells Fargo is not far behind with 22,968, and JPMorgan Chase holds the third-highest inventory of foreclosure “zombies”-16,054 by RealtyTrac’s count.
With 55,503, Florida is home to the highest number of unoccupied “zombie” properties.
In total, RealtyTrac estimates there are about 1 million vacant homes that need to be sold but are currently out of reach for most real estate agents.
Meanwhile, real estate markets across the country are dealing with inventory shortages.
The shortages, combined with high investor activity, have caused price surges in several markets. In fact, some real estate professionals worry that investors have crowded out traditional buyers and artificially inflated property values in some areas.
“It’s not rocket science to predict what will happen next,” said Steve Hawks of Platinum Real Estate Professionals in Henderson, Nevada.
He says Las Vegas “will see another 20 percent appreciation in prices over the next nine months. Vacant homes and delinquent loans will be converted to available inventory in the second half of 2014. And the second bubble pop in less than a decade will begin.”
“Only stupid money is buying now,” Hawks said.
JtR: If prices are going up 20% over the next nine months, why stupid now???
A full 8 percent of single-family homes in the Las Vegas metro-about 40,000 properties-are vacant, according to data from the Lied Institute at the University of Las Vegas.
RealtyTrac says agents hoping to survive in today’s zombie-land must form relationships with banks, private lenders, the GSEs, and distressed borrowers to dig into the shadow inventory and zombie population in order to bring markets back to life.
http://www.dsnews.com/articles/real-estate-professionals-must-battle-foreclosure-zombies-to-survive-2013-09-04
by Jim the Realtor | Jul 10, 2013 | Foreclosures/REOs, Market Buzz, Market Conditions, No-Foreclosure as Banking Policy |
Hat tip to Booty Juice for sending in Nick’s article on the Las Vegas market- and the effects of halting foreclosures:
http://online.wsj.com/article/SB10001424127887323687604578467260571838502.html
You’ll need to be a subscriber to read the full article – but here are excerpts:
LAS VEGAS—In a city dotted with tens of thousands of vacant houses, Jericho Guarin figured it would be easy to buy his first home. But nearly a year after beginning a search late last summer, he has come up dry.
“It has been a nightmare,” says the 37-year-old U.S. Air Force officer. “There are plenty of empty houses, but they’re just not for sale.”
Indeed, it is a lopsided equation. The number of available homes has plunged here after a sweeping state law subjected lenders to stiff new foreclosure rules and penalties. With banks exercising caution, many homeowners—including those seriously delinquent on their loans—have been allowed to remain in place. As a result, there is little on the market at a time when first-time buyers and real-estate speculators are anxious to tap both cheap prices and low-interest mortgages.
Many real-estate agents, home builders and consumer advocates argue that the law, intended to remedy foreclosure-processing abuses, has backfired. Some owners who are behind on payments aren’t maintaining their homes as banks refrain from eviction proceedings. The perverse outcome: Inventory shortages have spurred new developments despite a glut of properties stuck in foreclosure limbo.
The foreclosure delays have helped distressed homeowners like Scott Chatley, who went 54 months without making a mortgage payment. That gave him enough time to pay off debts, repair his credit, and begin saving for a down payment on his next home. Mr. Chatley, who bought a home here in 2005 for $495,000 with no money down, stopped making his $4,000 monthly mortgage payments in mid-2008 when he lost his job as a software engineer.
Mr. Chatley says he delayed foreclosure first by seeking loan modifications and then by filing for bankruptcy. His mortgage company, Bank of America Corp., last fall approved a short sale of his home for $169,000 to an investor. Though he moved out in September, Mr. Chatley says he probably could have stayed longer because the bank hadn’t been actively moving along the foreclosure.
Recently, he was prequalified by a credit union for a new mortgage and hopes to buy a new place later this year or early next. “If I see a rule that exists to help me recover without having to do anything illegal, why would I not use that?” says Mr. Chatley.
A Bank of America spokesman said it isn’t able to tell how much, if any, effect the state law had on Mr. Chatley’s foreclosure delay.
Nearly 45,000 loans are either 90 days or more past due or in foreclosure. Local electric-utility data showed nearly 64,000 vacant homes at the end of last September, according to a tally by analysts at the University of Nevada-Las Vegas. Fewer than 8,000 of those units were listed for sale.
A lag in foreclosures has had other deleterious effects. Homeowners’ associations aren’t collecting dues from borrowers who are behind on their mortgages. Some associations have begun taking advantage of their rights to file liens ahead of the bank—and then sell the liens to investors, who pay a few thousand dollars for the right to take control of the home until the bank forecloses.
Investors buy the liens “in the hopes that the mortgage is going to be lost in la-la-land, and the bank won’t foreclose for six months or two years,” says Richard Weiss, a real-estate investor who said he has taken ownership of around seven properties. While waiting for the bank to get its act together and foreclose, “you can do whatever you want—put a tenant in there and collect the rent,” says Mr. Weiss.
http://online.wsj.com/article/SB10001424127887323687604578467260571838502.html
http://www.calculatedriskblog.com/2013/07/timiraos-foreclosure-squeeze-crimps-las.html
by Jim the Realtor | Jun 25, 2013 | Foreclosure Count, Foreclosures/REOs, No-Foreclosure as Banking Policy |
Hat tip to Ken for sending in this article from Forbes:
http://www.forbes.com/sites/morganbrennan/2013/06/24/3-reasons-the-bubble-like-surge-in-home-prices-wont-last/
An excerpt that suggests one reason why prices are going up:
In some cases banks are choosing to hold onto distressed assets longer, hoping to minimize losses on homes by artificially tamping down distressed inventory levels now. So when a home comes available in a foreclosure sale, the lender may choose to repossess it as a future REO than part with it during an auction.
In states like Arizona, that repossession is logged at the value of the mortgage — a “sales price” that may very well be higher than the actual market value of the property, according to Ingo Wizner, president of real estate research firm Local Market Monitor.
Around SD County, it appears that more borrowers have started making their payments. The number of SD filings has dropped off almost by half, Y-O-Y:
Last month had 69% fewer REOs, and 42% fewer 3rd-party sales, Y-O-Y:
Regardless whether the shortage of distressed properties is due to more borrowers now making their payments, increased legislature, or a deliberate shift in banking policy, the foreclosure spigot has slowed to a trickle.
