February Foreclosure Activity Plummets 14%, Biggest Annual Drop Ever; At Lowest Level In 36 Months

Tyler Durden's picture

RealtyTrac has released a whopper of a foreclosure update. While total foreclosure activity had dropped in November when the first hint of fraudclosure was made evident, it subsequently stabilized and even increased slightly in January. Well, in February it took another step function lower, declining by a whopping 14% sequentially, and 27% Year over Year: the biggest decline in history. “Foreclosure activity dropped to a 36-month low in February as allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets,” said James J. Saccacio, chief executive officer of RealtyTrac. “While a small part of February’s decrease can be attributed to it being a short month and bad weather, the bottom line is that the industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures. We expect to see the numbers bounce back, but that will likely take several months. And monthly volume may never return to its peak in March 2010 of more than 367,000 properties receiving foreclosure filings.” What is even more disturbing is the following: "Scheduled judicial foreclosure auctions (NFS) decreased 7 percent from
January and were down 49 percent from February 2010. Scheduled
non-judicial foreclosure auctions (NTS) decreased 11 percent from the
previous month and were down 7 percent from February 2010.
" This means that banks are now actively halting process in that most critical of non-judicial states - California, which means the bottom is about to fall off the market. And with the monthly cost of associated litigation in the  tens of millions for the big mortgage lenders, it is now a certainty that the banks are massively underreserved for the litigation tsunami that is coming their way, especially with MERS now out of the picture and on the verge of seeing its entire business model unwind, rendering tens of millions of mortgages potentially null and void.

Only a chart can do justice to this abysmal data:

More from RealtyTrac:

A total of 63,165 U.S. properties received default notices (NOD, LIS) for the first time in February, a 16 percent decrease from the previous month and a 41 percent decrease from February 2010. Default notices hit a 48-month low in February and were 55 percent below a peak of 142,064 in April 2009.

In states with a judicial foreclosure process (LIS), default notices decreased 19 percent from January and were down 48 percent from February 2010. In states with a non-judicial foreclosure process (NOD), default notices decreased 13 percent from January and were down 31 percent from February 2010.

Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 97,293 U.S. properties in February, a 10 percent decrease from the previous month and a 21 percent decrease from February 2010. Scheduled foreclosure auctions hit a 27-month low in February and were 38 percent below a peak of 158,105 in March 2010.

Scheduled judicial foreclosure auctions (NFS) decreased 7 percent from January and were down 49 percent from February 2010. Scheduled non-judicial foreclosure auctions (NTS) decreased 11 percent from the previous month and were down 7 percent from February 2010.

Lenders foreclosed on 64,643 U.S. properties in February, down 17 percent from January and down 18 percent from February 2010. Bank repossessions (REO) hit a 22-month low in February and were down 37 percent from their peak of 102,134 in September 2010.

Bank repossessions in states with a judicial foreclosure process decreased 24 percent from January and were down 35 percent from February 2010, while bank repossessions in states with a non-judicial foreclosure process decreased 14 percent from January and were down 8 percent from February 2010.

And while banks may have risen in the past few days on the putback settlement progress, what Wall Street has yet to realize is that fraudclosure will extract just as large a pound of flesh, if not far larger, from the banks, and from their dividend paying ability. Which the banks are all too aware of, and are scrambling to repay as much as possible before all the bullshit swept under the rug starts to really stink up the room.

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Michael's picture

Ouch. That's going to leave a mark on the TBTF.

Careless Whisper's picture

Oh hey, thanks for the bailout, and BankofAmerica returns the favor by closing 10% of its branches. But sshhhhh, they keeping it quiet.




OldPhart's picture

Call to Action: Help close ALL the branches. Put them out of business. Move your money to a credit union or local bank. Refuse to do business with them.

bunkermeatheadprogeny's picture

The TBTF's don't want pesky retail deposits anymore, now that Bernanke gives them less than zero real interest loans.

DosZap's picture

Well if there were ever one that needs to be PUT out, the Morgue has to be it.

Not only are they stupid, because this will only cause folks to use credit cards they won't pay, it shows how corrupt they are as an entity.


Anyone who does business with this gang of hoods should be shot.

andybev01's picture

Just out of curiosity, what would this mean to someone who is (and always have been) current on his prime mortgage (which isn't underwater) and is looking to refi?

Any info would be greatly appreciated.

MachoMan's picture

It is possible that, through an overly complicated web (and likely purely academic argument) the payout for your home would go to the wrong person/entity and some type of lien remains.  More practically speaking, it means that if there is an issue with assignment of your mortgage that would prohibit them from foreclosing on you, it will likely be cured in the refi, given the previous chain would be "paid".  Given that you actually pay your note and apparently are not at risk of default, it means little...  other than less foreclosures should help prop up prices...  at least temporarily.  Price discovery be damned.

Seasmoke's picture

the Zombies are in trouble

Bearster's picture

Good thing we have a debt-backed monetary system where all of these bad mortgages (and the ones that will go bad when mortgagees see they can get away with defaulting) are someone else's money. You don't have any money lent on deposit to a bank do you?

RmcAZ's picture

Less foreclosures, equals less supply, equals higher prices, equals less delinquincies and less foreclosures! It is a virtuous cycle. Green shoots, bitches.


wisefool's picture

Not so much a virtuous cycle, but the same old hygiene motivator theory that is the only concept our current masters of the universe understand. History will look back at MBAs in the same way we look at psychatrists who advocated lobotomies for anyone who did not act like they did.

"Some people got nice houses. Some people lost nice houses. It is up to you, my fine young (nurse/consumer/animal spirit) to keep my tools sharp, be here early, leave late, and follow my orders so you might be in 'the position' to purchase one of these beauties when we decide to put them back on the market."

Bitches indeed.

Blorf's picture

Good ol' snow being blamed again... is there anything it CAN'T do?  Anyone know if it snowed in Libya recently?

barliman's picture


February seems so long ago now ... wasn't that when the scum CEO of MERS quit?


barliman's picture

My bad, I meant to cross out scum. Or CEO


Blythes Master's picture

I tried to tell my friend out in LA to stop 'investing' in RE out there and to come over to the dark side with us silver sluts.


Blue Pill time.

bankonzhongguo's picture

BAC has basically ceased its foreclosure ops in most of California since October.

But I have a theory. 

Its called the "What could be the new fun and games inside a QE3?"  Real Estate.

Real Estate, President election, bank bailouts.  Its a perfect storm.

The banks are going to negotiate "free homes" for Obama to hand out across the country in order to get votes in 2012.  The government cheese and the 99 weeks are up. Somehow 44+ million on food stamps and Section 8 - call it "Section QE3" can only make the transformation of an Amerikan serf class complete.

When the banks learned that the OCC could not force a fire sale of OREO as far back as 2008, a few RE bankers saw the returns of being landlords verses the actual mortgage market.  Surely the Fed, the Banks and Obama can see that by not foreclosing, but accepting a deed in lieu of foreclosure and then having short/defaulting borrowers pay rent on homes they will never own, the banks can keep their RE investments until they make their numbers, the shadow inventory melts away quicker and the poor are not kicked out on the street - Obama earns the thanks of millions of voting serfs.  The Fed will in turn pay subsidized rents to the banks in order to avoid more foreclosure hitting the books, or the Fed and FHA will buy mortgages outright, only to turn around and give them away to a greatful and desperate nation.

There are over 115 million households in America and over 130 milliion housing units. 

If you are a democrat in Ohio, Illinois or Michigan how could sanely vote for Obama again - unless you are getting a free place to live.  Just put it on your tab with mandatory health insurance.

jeff montanye's picture

that doesn't sound as improbable on second reading as it did on first.  note to default world:  never move out until the sheriff escorts you out.

Oh regional Indian's picture

This has got to be the Ultimate cognitive dissonance inducing development in recent US history, which is choc-a-bloc with said moments.

1) See the ownership of a house as THE American Dream

2) Give a couple of generations the false belief that they actually do live it

3) Junk succeeding generations on a ration of Flouride, aspertame, poor schools, entitlement mentality, cheap credit

4) Drive the housing bubble to said junk generations with insta-wealth dreams 9the creatred dot.con scam shows it is possible)

5) Once big enough, pierce said balloon

6) Rip all the foundations of the dream, turn it into a nightmare

7) Suddenly show massive fraud in said bubble blow-up

Now everyone from Generation Junk is confused. Do I own it? Free and clear? Yee haw.

As if the banks will let anything go so cheap or easy.

The next move in this game will be a rocker and a shocker.



Rogerwilco's picture

All part of the plan. Since nothing happens anymore without a 24/7 "crisis", TPTB will manufacture one to replace the nation's current state of narcoleptic apathy. I'm thinking it will unfold in stages leading up to the elections in 2012. The first stage is a takedown of equities and commodities by the Fed, followed by nationalization of the major banks later this year. This will be the setup for Obama's master stroke -- a "resolution" of the states, mortgage and pension funding problems by swapping assets in private retirement accounts for guaranteed federal annuities. Individual state bailouts will be offered in exchange for loss of sovereignty (DHS takes command of the national guard & state police).

If it works, interest rates fall, the DX is back at 90, and since China's economy is likely in chaos, employment picks up again in the U.S. during the months leading up to Obama's reelection. Of course the budget deficits will still be a problem, so the Fed can roll out the tried and true QEx.

taraxias's picture

I think you hit the wrong key when you typed that. It should read DX is back to 60 under the scenario you laid out.

Rogerwilco's picture

It took off like a rocket in Q3 '08 when TSHTF. That was the test run, since then the Fed has fine-tuned their system.

MachoMan's picture

At what point does the dollar see diminishing returns from staged flights to quality, if not already?

Azwethinkweiz's picture

What does the Bruce Krasting have to say now?

Careless Whisper's picture

Bank Of America admitted yesterday that it is servicing $1Trillion worth of mortgages that are at least 60 days past due and worse. Of those, B of A owns 25% of them. The total is about 7 million mortgages. Let's face it, most of them will end up in foreclosure. Maybe all. So B of A has $250 Billion of its mortgages in trouble. If it has to take a 40% haircut, that's $100 Billion. Yikes. Plus another 7 million homes foreclosed on. Not good for the real estate market. If they're going to take a haircut anyway, why not just write down the loan for the current mortgagor, and take an equity position on the upside?



Fearless Rick's picture

Foreclosures down? How hard will CNBC try to turn this into GOOD news?

RmcAZ's picture


Diana Olick is about the only CNBC'er that knows what they are talking about.

Misean's picture

That locomotive and several cars are now airborne over the cliff. Running toward the back of the train at this point is a bit, well, pointless.

Oh regional Indian's picture

How about a side-ways leap out the carriage?

At least you'll hit bottom on your own Gravitas (Grabitass?).


Rusty Shorts's picture

Mandatory Housing Bitchez

glenlloyd's picture

Uh oh, this smells like a big stinky problem.

Isn't there a whole buttload of ARM resets this year too? With rates artificially at zero I see this is a gift horse for these ARM resets, banks aren't going to be happy with this unless the reset rates are fixed at signing...which they could be, certainly I don't know.

gwar5's picture

Tyler has Tiger Blood. From Bloomberg re PIMCO dumping Treasuries:

"The Zero Hedge website first reported the change in assets today. Pimco doesn’t comment on changes in holdings."


John McCloy's picture

3 Trillion in Bailouts & QE + 0% interest rates for 2 years + 2 year artificial rally+ 250 NFLX Stock + 45 Million record on Food Stamps + 99 Weeks of unemployment benefits + Mark to Unicorns accounting + Unlimited Federal Reserve Repos to Euro Banks + 1 Trillion in ECB Debt monetization + Sky High Wheat, Grain, Sugar, Cotton, Cocoa, Rice costs + Cash for Clunkers + 105.00 Oil + Held back shadow inventory = Housing prices still declining 

= We are super fucked. And for all the quants interested you can keep the above algo.

jmc8888's picture

Awesome. It should drop by whoever is in 'default' for fraudulent MERS securitized loans in perpetuity.  So to just about 0.

But Fascist NerObama is trying to cut a 'deal'.  Bennie has the inkjets warming up backstage.  The TBTF's are at the ticket counter.

Pay for the fraud! It's your patriotic duty? 


Glass-Steagall is.

In the end, cutting or printing for fraud is the hallmark of a true Scrumdiddilydumbshit.  Oh and a fascist Benedict Arnold.


Scorpio69er's picture


MERS, the Mortgage Holder You Might Not Know

The MERS Corporation, claims to hold title to roughly half of all the home mortgages in the nation — an astonishing 60 million loans.

How can MERS claim title to those mortgages, and foreclose on homeowners, when it has not invested a dollar in a single loan?

And, more fundamentally: Given the evidence that many banks have cut corners and made colossal foreclosure mistakes, does anyone know who owns what or owes what to whom anymore?

The answers have implications for all American homeowners, but particularly the millions struggling to save their homes from foreclosure. How the MERS story plays out could deal another blow to an ailing real estate market, even as the spring buying season gets under way.






oh_bama's picture


Forelosure is DOWN and american homeowners are in better shape!!

Cheer up and BTFD!!!

MsCreant's picture

Here comes a dip now....Silver and Gold Flash Crash?

virgilcaine's picture

Zombie housing mkt.

Implicit simplicit's picture

Look for a new form of QE disguised as another  help the citizens TARP program. They will attempt to fool the public by softening the blow with a much propagandasized principle reduction (PR) for some home owners underwater. Coincidently (not), the ones chosen for the PR will only qualify if their mortgages  have  broken chains of ownership.

Bailing out the banks in this fashion will fool the public into thinking that the citizens are being helped, and the banks are paying, but in reality the banks will be getting a huge bailout as the bad loans are shared in a TARP pool with the banks, FED and -the GSEsFannie and Freddie. Hence another bailout paid for with taxes by the sheepie. 

Blankman's picture

How much shadow inventory is there is the real question.
Also here is the chart for those who forgot what the next ramp up in loan resets and foreclosure activity will look like:


We still have yet to weather the true storm. Time to drop the sails.

MonsterBox's picture

Great.  Now, how big, deep & wide is the shadow inventory (those homes sitting empty, not foreclosed on, not for sale)?  I understand these are kept off-the-books to keep the banks balance sheets "cleaner"....

Bad Asset's picture

It's going to be HUGE.  Just wait until June/July when the glut of 5-year option arms start to reset.  I work on pre-foreclosures in a mid-sized city for a major bank and last year we worked on 3000 different properties.  All of them are just sitting there, no sale dates even set.

apberusdisvet's picture

@andybev:  first you need an appraisal from a firm that is lender recognized, and you will only be able to borrow 80% of that amount.  Shop around: the TBTF will hit you for around 6-7% points as fees; title, processing, etc.  It should be only 3-4%.  If you can afford the payments, go for 15 year term, rather than 30 year.