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‘End of Forbearance To Be A Non-Event’

Health, unemployment, stairs, taxes, finances, politics…….selling your home is becoming the answer for everything!

More than 2.5 million American homeowners have stopped paying their mortgages, taking advantage of penalty-free forbearance periods offered by lenders.

What happens when the free pass fades away next year?

Not much, and certainly nothing approaching the flood of foreclosures that defined the Great Recession, according to the emerging consensus among economists. While some homeowners are sure to feel the pain of forced sales, housing experts increasingly expect the end of forbearance to be a non-event for the gravity-defying housing market.

That’s largely because home prices have risen sharply during the coronavirus pandemic. As a result, homeowners who find themselves unable to pay their mortgages when their forbearance periods end likely will be able to sell for a profit, rather than going into foreclosure.

“If they have equity, they can always sell off the house and pay the mortgage,” says Ralph DeFranco, global chief economist at mortgage insurance company Arch Capital Services. “It’s not a great outcome, but it’s less terrible than letting the bank take it and sell it.”

Link to Article

Oceanside Beach Bank-Owned

A rare Bubbleinfo TV trip to the beach area west of Coast Highway in Oceanside to see this very unique custom home that is a three-time loser – it was foreclosed in 1994, 2007, and February, 2017.

A buyer paid $1,500,000 for it in 2005, got foreclosed, then purchased from the bank for $1,012,500 in 2007.

The latest bank had it on the market during the spring selling season last year, but no takers.  Their last list price was $934,900:

We should see it back on the market again this year!

San Diego County Tax Sale

An online auction to sell real estate? Maybe it will catch on!

Gone are the days of the quick talking auctioneer, paddles and shouted bids. Today, San Diego County Treasurer-Tax Collector Dan McAllister announced he is moving the annual property tax sale auction online.

“With this new system, people sitting at home can browse and bid on more than 1,600 properties currently available, including timeshares starting at $900,” said McAllister. “The online auction aligns with our ‘e-nitiative’ to make it easier and more efficient to do all business with us electronically.”

The online tax sale auction will take place May 5-10. Interested buyers can register as a bidder beginning April 5, and registration will end April 27. Bidders must put up a $1,000 advance and a nonrefundable $35 bid processing fee.

“Moving this tax sale online will cut our operation costs compared to a live auction,” said McAllister. “We also hope to sell more properties as we open the auction up to bidders outside the San Diego region – even around the world.”

All sales are final, so this is a buyer beware sale. Before April, the Treasurer-Tax Collector’s Office (TTC) encourages everyone to research the selection of available properties by clicking here.

Right now, there are about 1,600 parcels available, roughly four times the number we have put up for auction in previous years. The majority – 1,231 – are timeshares, many with minimum bids as low as $900.

The remaining 393 parcels are improved and unimproved properties, 39 of which have owners living in them. Owners of the for-sale properties can redeem them by paying owed taxes and fees until 5 p.m. on May 4. Over the past five years, TTC notices and late bills to these owners have not been responded to. In early April, each of the properties will be personally contacted by TTC staff who will warn them of the impending sale.

The TTC has not held a tax sale auction since 2015, and on average, sales have generated more than $1.1 million each year.

http://www.sdtreastax.com/content/ttc/en/press-releases/Tax-Sale-Auction-Moves-Online.html.html

NSDCC Foreclosed Properties

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For those wondering if there will ever be any more bank-owned properties for sale, here is the list of 38 houses between La Jolla and Carlsbad that are owned by lenders, or 3rd parties who purchased them at the trustee sale:

NSDCC Foreclosed Properties July 2015

A few are listed for sale, and others are still waiting for occupants to vacate or lawsuits to be settled.  This Bressi Ranch home was foreclosed in April, 2014, and just hit the open market last week at what most would consider to be pretty close to retail price:

LINK HERE

The former owners had worked the system – they had been in default since 2008, and endured four different trustee-sale dates before finally giving up the ship.  In the meantime, the lender probably did everything they could to modify the loans?

I don’t think anybody has to worry about getting foreclosed unless they have significant equity.

Carlsbad REO Contest

Usually WaMu would have a REO agent do the normal routine – vacate, paint, and then list the home on the open market for just under retail.

The bank has already foreclosed – but instead selling of the old-fashioned way, they chose to make it an auction.com exclusive listing.

The house is tenant-occupied and can’t be shown, the buyer is responsible for evicting the tenant, plus the buyer has to pay a 5% premium but there’s no buyer-broker commission is offered (it’s not on the MLS) – and oh, by the way, you have to pay cash:

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The opening bid is 42% of the previous value, which looks attractive:

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P.S. This was foreclosed in 2011 – the trustee sale’s price that nobody wanted to pay then was $459,088.

What will the sales price be? (assuming the reserve price is reached)

The closest guesser will get 4 tickets to Padres vs Rockies on August 13th!

Glimpse of the Shadow Inventory

Here is a video tour of a few houses in the shadow inventory – ones that are bank-owned, but not listed for sale, but presumably coming to market at some point.

Yes, you could consider the 412 SFRs on the NOD and NOT lists as part of the shadow, but who knows if they will ever get foreclosed.  The same goes for those in default but not noticed – starting January 1st they can’t receive a notice until they have been through the entire loan-mod process.

As recently as the first half of 2010, there were 270 homes on average being foreclosed every week in San Diego County.  Now it’s down to around 100 or so per week:

San Diego County Trustee-Sale Results

There are only 16 SFRs in our La Jolla-to-Carlsbad region that are bank-owned, but not on the market.  Occupants were probably offered cash-for-keys, but those who prefer to pay lawyer fees instead can probably extend their stay for quite a while.

Here are five off-market REOs, and one listed for $699,900, well under it’s opening bid of $967,632:

Next Up: Selling REOs to Investors

If they make it a condition of sale that the investors have to rent the REOs they purchase, and can’t sell them, then this idea won’t have much impact on the resale market. Selling bank-owned properties out of the shadow inventory and then designating them for rental properties means the shortage of well-priced inventory for the end buyers will continue. From HW:

While the Obama administration may be pondering the idea of helping underwater homeowners through principal write-downs, Federal Housing Finance Agency Director Edward DeMarco said there is no current consideration for principal write-downs on underwater home loans.

DeMarco told C-SPAN in an interview that the FHFA has already assisted borrowers through principal forbearance programs and loan modification tools that have helped borrowers reduce their monthly payments. He said the other balance the FHFA has to strike is making sure home aid efforts do not afflict taxpayers with additional losses since public funds hold up the quasi-federal housing agencies. He placed write-downs on principal in this camp and suggested the FHFA is not going in that direction.

“Principal forgiveness does not accomplish our conservator mandate,” DeMarco said on CSPAN while speaking to reporters from Reuters and the Wall Street Journal. He added,”the borrower still has a responsibility and an obligation for the repayment of the loan.”

DeMarco said the FHFA sees the next housing initiative being one that focuses on offloading GSE properties to investors who can buy the REO properties in bulk and turn them into rental properties.

To date, the FHFA has received 4,000 comments from interested parties who submitted feedback on the proposed REO bulk sales program.

“Now that we have the HARP announcement out, we are turning to this as the next priority,” he said.

The FHFA said earlier this month that it would lower barriers to refinancing, allowing more underwater borrowers to qualify for the government’s HARP refinancing program.

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Rick Sharga and Carrington are already jockeying for position, trying to run off competitors here.  Who ends up getting what, and for how much, should be quite a spectacle, unless it’s all done in secret, behind the usual closed doors.

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