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.
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:
|REO Owner||Aug. 2010||Oct. 2011|
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.
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!
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:
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.
The number of SFRs foreclosed between Jan. 1 and August 10th in 92130:
We tend to spend a lot of time on short sales and foreclosures, what percentage of the market are distressed sales in the North San Diego County Coastal region (La Jolla to Carlsbad)?
The REO and short-sale MLS detached listings that have closed escrow equal 19% of the overall market, year-to-date.
The 2011 year-to-date breakdown of closed sales, and avg. cost-per-sf:
Four out of five this year have been regular sales.
The cost-per-sf is also influenced by location – 64% of the SS/REO closings were in Carlsbad/Encinitas.
I think we’ll see an increase of short sales over the next 24 months, unless lenders dig in over SB 458 and reject more of them. If they decide on a case-by-case basis, they’ll probably be inclined to deny those with bigger loan amounts, and take their chances that a collection agency will be able get more after the foreclosure than the a couple of thousand dollars they’d get out of a short-sale.
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|
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!
|Town or Area||Dec ’09||Sept ’10||Today|
In trying to keep my promise to post only NSDCC-related data, here’s a national article from G-S, with NSDCC relevance at the bottom. Hat tip to Aztec for sending this along:
As of 1Q, the number of seriously delinquent federally backed loans surpassed the number held by banks and private label securitizations and now accounts for the majority of seriously delinquent mortgages (seriously delinquent mortgages comprise loans in the foreclosure process as well as loans that are 90-plus days delinquent but not yet in foreclosure).
This shift is due to the persistently elevated level of seriously delinquent loans among Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), in contrast with private-label and bank-held loans, where serious delinquencies peaked in 2009 and have declined significantly since.
The chart below shows the number of seriously delinquent mortgages backed by federal entities and the total mortgage market; the right axis shows seriously delinquent loans as a share of the total.
The federal share of REO property is also rising.
The foreclosure numbers aren’t growing yet – we’re all convinced that they’ll be dripped out for years to come, right? The push towards loan mods and short sales enables all participants to drag out the inevitable, and it’s probably not going to change.
In San Diego County, there has been an average of 1,053 properties per month get foreclosed over the last 13 months – with an average of 764 per month going back-to-bene, and an average of 289 per month being bought by third parties:
Over the same 13 months, there has been an average of 2,716 properties per month sell on the MLS, so there has been an appetite for more than just the bank-owneds.
In North SD County Coastal, the recent detached pendings are starting to wane slightly, though the battles for the high-quality buys continue – there were six written offers on the Glaucus listing in Leucadia over the weekend, with many more interested. Here are the recent weekly new pendings from La Jolla to Carlsbad:
|Week||New Pendings||LP Avg $/sf||# Already Closed||SP Avg $/sf|
While there isn’t obvious evidence that prices are on the rise, it looks like last year’s $380/sf average for detached homes sold in North SD County Coastal is holding up for now.
There have been 69 detached closings in NSDCC since February 1st; their average LP-per-sf was $417/sf, and the sold average was $391/sf.