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Foreclosure Activity Jumps, Reverses 4 Month Declining Trend
After having declined for 4 months in a row, July foreclosure activity once again took a leg up, increasing by 4% from the prior month to 325,229 in July according to RealtyTrac. There was deterioration across all three foreclosures categories: default notices, foreclosures auctions and bank repossessions (REO). “July marked the 17th consecutive month with a foreclosure activity
total exceeding 300,000,” said James J. Saccacio, chief executive
officer of RealtyTrac. “Declines in new default notices, which were down
on a year-over-year basis for the sixth straight month in July, have
been offset by near-record levels of bank repossessions, which increased
on a year-over-year basis for the eighth straight month.” Of note is the ongoing increase in bank repossessions as banks seems increasingly less motivated to put foreclosed properties in auctions lists. Per RealtyTrac: "Lenders foreclosed on 92,858 U.S. properties in July, a 9 percent
increase from the previous month and a 6 percent increase from July
2009. July’s bank repossession (REO) total was the second highest
monthly total since RealtyTrac began tracking REO activity in April 2005
and was 1 percent below the monthly REO activity peak of 93,777 in May
2010."
Geogrpahic Breakdown
Five states account for more than 50 percent of national total
California alone accounted for 21 percent of the national total in July, with 66,910 properties receiving a foreclosure filing during the month — down 3 percent from the previous month and down 38 percent from July 2009.
With 51,557 properties receiving a foreclosure filing during the month, Florida accounted for 16 percent of the national total in July despite a nearly 9 percent decrease in foreclosure activity from July 2009.
Illinois foreclosure activity increased 33 percent from the previous month — the biggest monthly increase among states with top 10 foreclosure rates. A total of 19,602 Illinois properties received a foreclosure filing in July, the third highest state total and accounting for 6 percent of the national total.
Michigan accounted for just under 6 percent of the national total, with 18,833 properties receiving a foreclosure filing in July, and Arizona accounted for 5 percent of the national total, with 16,298 properties receiving a foreclosure filing in July.
Other states with foreclosure activity totals among the nation’s 10 highest in July were Nevada (13,727), Ohio (13,511), Georgia (12,577), Texas (11,727) and Maryland (6,961).
Elsewhere, in the UK, the Council of Mortgage Lenders warned that even as the number of homeowners falling behind in their mortgage payments eased in the second quarter of the year, the trade body representing the nation’s lenders warned of “strong headwinds” ahead for the housing market as it downgraded its lending forecast for 2010 according to the FT.
It warned, as it has in recent months, that the need to repay government guarantee schemes were likely to constrain lenders’ ability to supply as much credit as the market wants.
“If borrower demand persists in the business sector, it may be that funding is prioritised in this direction rather than personal mortgages, which could impact activity levels,” the CML said.
[The CML ] pointed out that looking at the overall average level of repossessions obscures some important trends. For example, in the lowest arrears category – those who have unpaid balances equal to 1.5 to 2.5 per cent of the sum borrowed – there has been a marked improvement from the second quarter of 2009 and these are now only 0.7 per cent of all borrowers, down from 1.0 per cent.
But in the highest category of arrears – those who owe 10 per cent or more of the sums they have borrowed – the proportion of those falling behind remains static at 0.23 per cent. It is this group of borrowers that are considered most likely to slip into repossession. The CML said its data suggest that there remains a significant segment of borrowers whose arrears may have been stabilised through lender forbearance or other forms of intervention but who have still not been able to claw their way out of their problems.
Meanwhile, the number of properties repossessed in the period also slipped to 9,400 from 9,800 in the first quarter – a decline of 11.3 per cent – down from a recession peak of 13,200 in the first quarter of 2009. However, the percentage of repossessions which are “voluntary” – where homeowners acknowledged they could not keep up payments and returned the house keys to the bank – rose to 2,700 – or 28.7 per cent of all repossessions.
It appears banks everywhere are still ahead of the extend and pretend game, although the underlying dynamics continue to shift to where continued "pretense" will soon be problematic.
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The foreclosure graph may be interpreted to reflect the banks level of foreclosure assimilation they are comfortable with. It is eerily consistent.
After this much time, they have probably developed reasonable systems for the disposal of properties.
If they really wanted to get rid of the malinvestment, they would be making credit available for purchases. They aren't.
I would love to see this graph overlaid on a graph of FED purchases.
who knows. i may end up with a castle yet.
Recovery summer indeed!
Australia’s Housing Bubble- Past the Point of No Return
Thanks for running this article; I've been wondering about it.I can't quite figure out the Banks' game here. Sure, they foreclose, but then they sit on it.
Especially interesting is that BofA is supposedly in the lead on foreclosures right now.This is a little odd that they'd write off the loans, because BofA has some of the worst set of Troubled Assets of the big banks (if you can believe what they are reporting). Also, one VP announced a few months ago that BofA was going to start releasing the foreclosures in their Shadow Inventory this year.
Perhaps BofA and the other banks are trying to cash in on QE II, or sell something before RE tanks? Or perhaps they are just getting political pressure from having people sit in their houses for years, rent free?
I don't know. But something does seem to be cooking, and I wish I knew what they were trying to do here, other than drive more bad assets onto their books.
Recovery summer indeed. Rally time today.
And when the unemployment checks stop you will see the big mud slide to values undreamed of.
Banks are now the largest land owners (besides the US government) and more to come. Cities will be renamed just like stadiums that carry corporte names.
Anyone who thinks this is a buying opportunity needs to watch CNBC and buy whan they say to.
++ Exactly !!
As long as there is a terrible labor market the future of home values is down.. down..
ALL CLEAR!!!
Everyone back in the pool.
I agree with the first poster. The relatively flat line of the graph indicates to me that the banks have figured out the rate of foreclosures that is consisten with them staying in business and paying out bonuses to their execs. The total of auctions+repossessions is higher then new default notices, so for the time being they are making progress working through the bad loans.
interesting take from MS on housing indicies
http://www.housingwire.com/2010/08/04/for-investors-sake-morgan-stanley-...
Would the banks be sitting on all this excess property
because they are confident that inflation (in home prices)
will be returning, so that they will get more money for them later?
Not sure but they are certain of the deflationary aspect hitting their remaining inventory once the spigot cocks. If they have a 9 year supply as apposed to the 5-6 year in a normal market, it's likely housing has another 20-30% drop ahead of it. As for inflation artificially raising the price of RE, the same forces also drive interest rates up making housing less affordable....unless of course we see the second leg down that is anticipated.
Values are still lookin' good in The Hills of Cali while TPTB sacrifice the flats to temporary breakwater status as the remaining members of the hive crowd what appears to be high ground.
The rate of foreclosures is closely linked to the banks' quarterly earnings requirements.
DOW and SP500 bearish megaphone wedge charts continue ...
http://stockmarket618.wordpress.com