This page has been archived and commenting is disabled.
Home Foreclosures Rise 5% from Summer to Fall. Why? What else? Unemployment.
In the July to September quarter, foreclosures affected nearly 938,000 properties, compared to about 890,000 in the prior three months, according to a report by Realty Trac Inc.
Foreclosure-related filings are on pace to hit around 3.5 million in 2009, up from just 2.3 million last year.
Unemployment is the culprit, and many analysts don’t expect this figure to peak till the middle of 2010.
Some mortgage companies are allowing unemployed homeowners three-to-six months worth of payments till they find a job, but in many cases, this is of little help.
The Obama Administration, in it’s infinite optimism, hailed a milestone just last week in its mortgage relief efforts- reporting that 500,000 homeowners have received help since the program was launched in March; but new defaults are rapidly exceeding relief efforts.
While mortgage companies have slowed their foreclosure processing- by evaluating if a homeowner is eligible for relief efforts, etc, etc; many will not qualify, for most mortgagees are in debt up to their eyeballs even with a paying job, any payment reduction or deferment would be of little help.
According to Realty Trac- there were some 344,000 foreclosure-related filings last month, down 4% from August, but still the third highest month since the reports inception in the first quarter of 2005.
September was the seventh-straight month in which more than 300,000 households receiving a foreclosure filing, which includes default notices and several other legal notices that homeowners receive before they finally lose their homes.
Banks repossessed nearly 88,000 homes last month, up from 76,000 in August, 2009.
Nevada had the nation's highest foreclosure rate in the third quarter. Arizona was No. 2, followed by California, Florida and Idaho. Rounding out the top 10 were Utah, Georgia, Michigan, Colorado and Illinois, Obama’s adopted homestate.
»
- 5283 reads
- Printer-friendly version
- Send to friend
- advertisements -
5%; isn't that the upper limit on a tranche which then makes the tranche to become worthless, or am i just hallucinating. No, wait, i think it's 4.8 %, but nevertheless the limit has been crossed. Oh well, more carnage for the banks, unless they have some accounting model which makes it possible for them to not account for the losses. Oh, wait ....
The number of foreclosures in the legal section of the paper has been very, very high for over three years now. I have not seen it slacken.
Pretend and extend until the universe explodes. It's no longer about fiduciary responsibility to your shareholders that the executives of these banks worry about (if they ever did) but simply not blowing up before their competitor.
The simple logic is that because the government allows it, the Fed encourages it, the shareholders like the short term effects of a rising stock price and the American (and worlds') population are asleep at the wheel, short term thinking that will kill you long term is OK, in fact required.
For the past 2 decades, as I watched corporate executives completely abandon thinking any further beyond the next quarters numbers, I often wondered what the long term effect from this self centered naval gazing narcissistic mentality would be.
The spirits are about to speak.
Cognitive D. Read this, i think this is why the things are as they are, and why they will not get any better in the foreseeable future ( as in 200 yrs foreseeable )
http://www.truthdig.com/report/item/20081208_hedges_best_brightest/
make sure to read it; although we all know this ( by we i mean ZH readers ) it is beautifully articulated article and an excellent analysis .
Thank you for posting this :)
narlah, no problem, the guy who wrote the article hit the nail on the head IMHO
excellent article - i used to work for a hedge fund and the biggest mistake i ever made was to hire a Wharton MBA grad who perfectly fitted this profile. Deep down I knew all this to be true but for some bizarre reason I went against my instincts and hired him anyway. 0 original thought 0 money making ability...the whole thing was a fucking disaster
Investment banks are full of these drones. I think the saddest thing is that they treat their education as some kind of insurance policy or statistically significant precondition....as in ... I just spent 220k on a degree, thereforet i expec to make 125 kpa and pay the thing off in x years
The people doing the hiring are generally in the same vein ..... lack of education will be the downfall of the US
aus_punter
as i said months before here on ZH, the main problem, out of which all our problems emerge is a philosophical one; and that problem is manifested in the education we provide to our children, and it dictates our societies, and henceforth, everything that constitutes a society. If you don't mind i will slightly change what you have written in your response to my post
the lack of pragmatic imagination and individuality will be the downfall of the entire world ....
the lack of pragmatic imagination and individuality will be the downfall of the entire world ....
+1000. And the trend is heading in the wrong direction.
Aside from home-schoolers, we don't provide education to our children.
The nutty leftists who have flocked to education for the last 15 years do. Those who have not been around Ed majors any time recently probably do not understand the magnitude of the problem - these people are very open about their motivations, mainly, to steer your children towards the "correct" ideology.
Once again, CB, you have posted a piece that was both pleasurable to read and quantified that nagging "something's not right but I can't put my finger on it" feeling I've had for a long time. Thank you.
That said, I like the way my wife summed up higher education in the US about 3-4 months ago. "All a Bachelor's degree proves is that, at least 50% of the time, the recipient has been successfully taught to steal/commit fraud or to look the other way while it is going on all around them."
Thanks for sharing that CB. Well worth the read. It explains, among other things, the steadfast faith in fiat monetarism displayed by so many commenters.
I actually read that article when it was first published but thank you for putting it back out there for all to read again. I just did.
I hate pointing to the "system" and claiming foul because it has a tendency to misdirect attention away from personal responsibility.
But our culture, our school and corporate systems have created an entire generation of thugs.
Yes, that is an explosive word and I can assure you NO ONE thinks they are a thug. But that is part of the indoctrination, the group think that is always correct and isolates contrary thinking or actions.
If it acts like the Mob (as in Mafia) regardless of how it sees itself, it is the Mob. Welcome to the new normal.
Very good article. Unfortunately the most well thought out pieces I read, like this one, make me feel even worse about the mess the world is in. Thanks for posting the link.
Great link, thanks for the post. I know from personal experience that students on the Berkeley campus have all the cultural diversity of the Borg.
God I love the Star Trek reference on ZH. It just seems so right.
And Borg fits so well in this case because the Borg start out as normal beings but are "assimilated into the collective." If that doesn't described these schools, I don't know what does.
Of course, the graduates of these schools would say I have penis envy. Not so. I have no interest in their penises.
:>)
HA! you think they're using an accounting model... CB, models are sooo last year. The new mantra is it's in full repayment until it's in total default, and when it's in total default, it's off balance sheet. Booyah.
Hey CD,
Just wondering how exactly are the spirits about to speak. As far as I can tell Americans can't see past Monday Night Football.
I'm extremely disappointed about what is occurring not from any personal financial perspective, but from a moral perspective. I had always thought, and naively in retrospect, that ultimately the US was where things would be done with a longer term plan and with thoughts for the well being of its citizens. I was way wrong.
GillianX
"...Illinois, Obama’s adopted homestate." LOL
Preceded by Hawaii, Indonesia, Kenya and probably conceived in HELL.
I am certainly glad the GREAT MESSIAH Barry-0 came along just in time to deliver us from our despair. The recession is over and we can move on. These increases in foreclosures are just little bumps in the road.
Select ratingCancel ratingPoorOkayGoodGreatAwesome
Awesome
I read Hedges essay. It is leftist BS. We are up S.C., in some sense, with the help of the best and the brightest. But much more blame falls on the worldview of someone like Chris Hedges which is also the worldview of many of his fellow graduates of elite universities. If we just had a little more old time lefty religion then things would be fine. If Hedges or anyone thinks they are going to find nirvana in the moldy cobwebbed canon of the left they are in for an awful surprise.
http://av.r.ftdata.co.uk/lib/inc/getfile/17946.jpg
Where the hell did that come from. Where the hell did you even read the slightest mention of leftism in that article. I know paranoia is an evolutionary thing developed in order to keep us aware, but dear sir, you took it to far. If anything, that article is going against the left AND the right; it goes against the system and against those who rule you, me and the people we know. If you think this is the place for expressing you political view ( be it left or right ) or to side with one of the parties ( be it Democrats or Republicans ) you are in the wrong place. If anything is commonly accepted here on ZH it is hatred towards the things i have mentioned above.
Although unemployment is the key driver behind the high foreclosure rate (and its recent uptick), you must also bear in mind that this number is heavily doctored as a result of government intervention and bank malfeasance.
Just to give one example with which I'm familiar, there was a big outcry to change the procedural rules concerning notice of court processes. As a consequence, the Rules Committee (of the Court of Appeals of Maryland) made extensive changes to the rules, the effect of which was to cause a temporary slowdown in filings. Once that delay blows through the system, however, its full speed ahead. Other states (e.g., California, the big tuna) had full-blown moratoria on foreclosures. This had the effect of temporarily cutting off and backing up the flow. But once the moratorium expired, its full speed ahead.
As many readers here are aware, the banks are dragging their feet in concluding the inevitable and taking title to many of these properties. To do so requires them to book the loss, so they'll avoid that as long as possible. Otherwise their insolvency becomes unavoidable. And the FDIC and other regulators just look the other way.
One of the oldest maxims in the law is that "the law hates waste." Meaning, in general, a property should be put to its best use. In the case of banks and their diligence in foreclosures, it seems that letting persons stay in these homes for free, while they demolish the insides, is very definition of "waste."
I'm just curious how they all end up reconciling their duty to protect investors/depositors' money, while at the same time letting their collateral and underlying assets deteriorate at break neck speed...
duty to mitigate anyone? bueller?
"In the July to September quarter, foreclosures affected nearly 938,000 properties"
...
"Banks repossessed nearly 88,000 homes last month, up from 76,000 in August, 2009."
What else happens to the properties other than being repossessed? Do they just go to Goldman?
Returning to source. When banks are the source of all wealth all the houses return to them.
What happens is after the foreclosure is filed with the Courts, the mortgage companies do little, if anything, to move the foreclosure along.
I haven't paid my mortgage since May, 2008. In January, 2009, Citimortgage commenced foreclosure proceedings. In May, 2009, I filed Ch. 7 and in Sept., 2009 I as discharged.
Citmortgage didn't even file to Lift the Stay to proceed with the foreclosure and has done NOTHING since filing the foreclosure in January.
My mortgage is $450,000 and they could probably get $200-$250k today if they were lucky enough to have a buyer come along who was interested.
Your point about bank-owned properties versus foreclosures in process is HUGE.
Millions of "distressed" homes are poised to come on the market over the next year or three.
THAT's the shadow inventory. And I believe it is a concerted attempt to not destroy the real estate market by delaying the process and drip feeding homes into the "for sale" process.
Thanks for posting! I see lots of empty houses in my neighborhood, also shadow inventory. I live in a well established area and know most of them are from home equity locusts feeding off the money then abandoning the house.
It is sad to see what this bubble did to our society. Lots of good neighborhoods were destroyed by the Governments easy lending schemes.
Keep us updated on your situation. I for one would like to know how long these fuckers will let you ride for free. :)
Unemployment isn't the only thing driving up defaults on mortgages. So-called "strategic defaults" are also a big issue that is driving up delinquency/default rates in prime and Alt-A mortgages. When the mortgage balance significantly exceeds the market value of the house, many people who are employed and can afford their mortgage payments are making the decision to stop paying and living in the house until they're forced out. That might take 12-18 months. Experts in mortgage backed securities will tell you that when the loan to value ratio goes much above 100%, delinquency and default rates soar.
Strategic defaults are spreading. Once a person knows others who have done it, the social stigma against it is diminished and they become more likely to default themselves. Here's one article on strategic defaults. A search of the term would yield many more articles.
http://articles.moneycentral.msn.com/Banking/YourCreditRating/the-rich-b...
By the way, high LTVs are a big reason why re-default rates are so high on loan modification programs that lower the interest rate but don't reduce the principal balance of the loan. People aren't inclined to stretch to make payments on a $200,000 mortgage on a house that is worth $125,000. They decide it makes more financial sense to walk away and rent.
Exactly. But you cannot totally blame the individuals who are in default. The bank agreed to the collateral, i.e. the value of the house. And if the banks were not mostly idiots/criminals enabled by a corrupt government, they would not have made those loans. Any banks who did make those loans should go bankrupt. That's how it works in a non-alternate universe called sanity.
One wonders how long it will be before the US government "strategically" defaults...
Foreclosure, or free house? Time for some blowback?
http://rismedia.com/2009-09-28/op-ed-60-million-mortgages-may-have-fatal...
Op-Ed: 60 Million Mortgages May Have Fatal FlawsCommentary by George W. Mantor
RISMEDIA, October 5, 2009—The latest chapter in the mortgage meltdown is being written in court, as one by one, judges are putting a halt to foreclosures. The latest was a recent Kansas Supreme Court case. In Landmark National Bank v. Kesler, the court held that a nominee company called MERS had no standing to bring a foreclosure action.
Nor was Kansas the first. In August 2008, Federal Judge for the U.S. Bankruptcy Court for the District of Nevada ruled MERS had no standing. ”Indeed, the evidence is to the contrary, the Note has been sold, and the named nominee no longer has any interest in the Note.”
In September of 2008, A California Judge ruling against MERS concluded, “There is no evidence before the court as to who is the present owner of the Note. The holder of the Note must join in the motion.”
On March 19, 2009, the Supreme Court of Arkansas determined that MERS was not the true beneficiary because the Note had been sold. Alabama and Florida have made similar rulings.
This is absurd. Everything is going to be fine. The Fed is going to be hiring tens of thousands of people to begin doing door to door searches to confiscate the people's gold while the ATF plans the same to get your guns. Technically, they could do one search for both, but doing two searches will help the jobs number. Once they get that done, the IRS will be hiring hundreds of thousands of special agents to pick over the scraps. Oh, and before I forget China's going to buy all these foreclosures from the banks in package deals. This is a real plus because it will allow the government to "make a profit" on TARP. While we're distracted, Ben will ram QEII (I thought it was a boat) through. Yes, your rent check will go to Beijing and you won't have your gold or guns, but you'll adjust. It's wonderful to have so many people working so hard to help us.
Yet another reason for delayed/hidden backlog of foreclosures:
http://www.calculatedriskblog.com/2009/10/amherst-few-hamp-modifications-to-be.html
Core and regular CPI .2%, Initial claims 514,000 (revised DOWN), CNBC (Cause NoBody Cares Network) said it is hinting at a recovery.. ? Empire doubled to 34.57 WTF?
-Michael
Core and regular CPI .2%, Initial claims 514,000 (revised DOWN), CNBC (Cause NoBody Cares Network) said it is hinting at a recovery.. ? Empire doubled to 34.57 WTF?
-Michael
Revised from 521,000 to 524,000.
Let's see. Presuming you still have a job but you are underwater on your house and are loaded with debt, you decide not to pay the mortgage since the banks are giving you a free ride. That frees up cash to spend - a green shoot. Retail sales should be increasing from here. Buy the retailers.
Didn't I see somewhere that wages deflated by 5+% YOY so far? How does that translate into an INCREASE in holiday shopping and then factoring in the folks who are newly unemployed...and underemployed added since last holiday season??? I am confused...
Don't be. Mortgage payments typically take up a significant amount of monthly income - 20-30%. So, not paying the mortgage frees up a significant amount of cash even if your income dropped by 5%. There was a bit of sarcasm in my post though. However, the typical American has become used to spending like there is no tomorrow. Unfortunately, tomorrow is here today.
and lookout, we're seeing interest rates creep up further and further on the far end of the curve. That will only accelerate the rate of default for underwater owners who are on the fence, as well as any ARM, or interest only deferred principle buyers. Basically it will be a very cold cold winter and if there's no incentive to kickstart housing next season (late april, may, june, july and august) housing will likely fall another 10-15% during it's peak season.
I'm also interested to see how the shadow inventory problems are dealt with.
-Orange juice
With wages on a continued decline joe sixpack will work 2-3 times for todays dollars. Unemployment will spread but the rate will freeze (BLS magic). So the lucky few get to work more while taxes are sure to double. When the middle class looses hope... then we may see change on a grand scale.
Didn't see it posted, more stats from Bloomberg
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFofq9_za8Is
> More than $400 billion in U.S. home mortgages that were packaged into securities and sold by companies other than government-supported Fannie Mae and Freddie Mac are in default and may be foreclosed on, S&P said.
Albeit I have very little experience, that seems like an awfully large number.
The Lex column has an apt comparison in todays FT.
Simply halting the rise in unemployment seems unlikely to produce more activity. With a similar sized workforce of 135m people back in the year 2000 there were 5.2m existing home sales. On a seasonally adjusted basis, transactions hit that rate in July, and were running at a 5.1m annual pace in August, according to the National Association of Realtors. From an all-time peak of 69 per cent in 2005 (when 7.1m homes were sold), rates of owner occupation are almost back to the 67 per cent typical a decade ago. Assuming no return to the mania of the boom, job formation is needed to spur demand.
Duh.. The question going forward is if the market will equilibrium at 67%.
Let's have a morotorium on morgage payments (interest portion only) for 12 months starting 2010. I bet that will raise home prices alone. Can anyone calculate the cost (to the banks in interest) for this scheme and compare that to the bail out money sent to them?