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Latest Foreclosure Activity Report Presents Conflicting Perspectives
RealtyTrac's October foreclosure data is out and while it represents a third sequential decline in deterioration, with 332,292 foreclosed properties during the month, it was still a 19% increase from October 2008. The question of whether this is due to aggressive loan mod roll outs by underwater banks, or whether insolvent homeowners are turning to the GSE's and becoming renters, thus avoiding the need to be foreclosed upon, is one that will likely not be answered any time soon, if ever, by the administration. In the meantime, one in every 385 U.S. housing units received a foreclosure filing in October.
From RealtyTrac:
“Three consecutive monthly declines is unprecedented for our report,
and on first blush an indication that the foreclosure tide may be
turning,” said James J. Saccacio, chief executive officer of
RealtyTrac. “However, the fundamental forces driving foreclosure
activity in this housing downturn — high-risk mortgages, negative
equity, and unemployment — continue to loom over any nascent recovery.
And despite all the efforts and resources directed at helping
homeowners avoid foreclosure, we continue to see foreclosure activity
levels that are substantially higher than a year ago in most states.”
Not surprisingly, the biggest weakness continue to be focused with the three horsemen of the housing apocalypse: CA, NV and FL:
Nevada, California, Florida post top state foreclosure rates
Despite a 26 percent decrease in foreclosure activity from the previous month, Nevada
continued to document the nation’s highest state foreclosure rate — one
in every 80 housing units received a foreclosure filing in October. A
total of 13,842 Nevada properties received a foreclosure filing during
the month, a 4 percent decrease from October 2008 and the first ever
year-over-year decrease in Nevada since RealtyTrac began tabulating the
year-over-year change in January 2006. Nevada default notices were down
10 percent from October 2008, and scheduled foreclosure auctions were
down 6 percent from October 2008, while bank repossessions were up 8
percent from October 2008. A new foreclosure mediation program
implemented by state law (AB 149) in July may be slowing the inflow of
distressed properties into the foreclosure pipeline.
With one in every 156 housing units receiving a foreclosure filing in October, California posted the nation’s second highest state foreclosure rate
for the second month in a row. A total of 85,420 California properties
received a foreclosure filing during the month, a decrease of 1 percent
from the previous month but still nearly 50 percent above the total
reported in October 2008. The state’s default notices and scheduled foreclosure auctions
were up 120 percent and 73 percent respectively from October 2008, when
California foreclosure activity was in the midst of a three-month
trough after a law (SB 1137) requiring lenders to give distressed
homeowners extra notification before initiating foreclosure took effect
in September 2008.
Florida posted the third highest state foreclosure rate, with one in
every 168 housing units receiving a foreclosure filing in October. A
total of 51,911 Florida properties received a foreclosure filing during
the month, a nearly 6 percent decrease from the previous month and a
decrease of 4 percent from October 2008. It was the first
year-over-year decrease in overall Florida foreclosure activity since
July 2006.
A graphic representation of the foreclosure "heatmap" can be seen below:
Lastly, a granular look at default, REO and auction activity indicates that the most recent tapering off may be mostly noise-based, even as the government does everything in its power (and more) to finally moderate the housing implosion which is now well into its third year.
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More bizzaro world - EPS 1:1 correlation with unemployment - GDP up $5T in decade wioth no job growth
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$63.50 from $61.50
* UBS US equity strategy: raises 2010 S&P 500 <.SPX> pro forma EPS view to $81
from $74
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* UBS US equity strategy: reiterates positive stance on U.S. equities
On par with umemployment...
http://74.125.95.132/search?q=cache:PBafuOq5NNAJ:online.wsj.com/article/...
This is the real story...banks don't want anymore properties and have too many to sell as it is. The question is how long can they "sit" on them before they suddenly trip over themselves to unload them? As we all should have learned, the banks are reticent to face any problem head on, they prefer to let them fester until they are so large that someone else must be responsible. It's a sick situation and quite like watching the same slow motion car wreck day after day after day.
The banks are wishing for the same type of market conditions that S. California has.
(Excess of stupidity, shill home biders, and strict control of supply).
http://bubbleinfo.com
The banks, Realtors, and flippers are all in it together. And all the loan $$ is coming from VA, Fred/Fan.
True. Question I have is, how long before the banks/mortgage holders begin bulldozing houses to get them off their inventories? Would serve two purposes: 1) Reduce maintenance and insurance costs. 2) Lower the inventory of available houses to prop up values.
Disclosure: long Caterpillar.
Know you are joking but ... I heard Bill Gross mention this a year ago. Was a dumb idea then and this from somebody who should know better.
Are the assets worth the debt hanging over them? No. Are they worth something... of course. I bet someone woud pay $1 for a house... then somebody else would bid $2 ...etc. etc
The banks are caught. They don't want any more inventory to come on their books so they aren't foreclosing on properties. By constricting supply they are trying to prop up values any sales they make are realized losses on their books. People who are upside down have stopped paying their mortgage ... why should they? The banks are not foreclosing. How long can that business model run? What will have to give is the banks ... sooner or later they will have to realize those losses and we will finally hit bottom. (my guess 2011-12)
~2012? Hell yes.
Right on schedule for a new monetary system!
Why bulldoze? Vacant properties in a high unemployment environment are subject to stripping and vandalism.
The insured loss from damage and the residual shell value might be higher than the foreclosure value.
Ding! Ding! Ding! We have a winner!
Not only is it the biggest story, but it's also the biggest story in the news which is getting absolutely zero coverage by the MSM.
Even in the blogosphere, it's getting little coverage.
Reggie - where are you on this?
And I'm not just talking about Deed-to-lease. The banks are just refusing to put some of the big CRE foreclosures on their books.
Watch the cash flow for the banks, as they still have to service these loans.
I think they left the shadow inventory numbers off that graph.
The pitiful part is that Cash 4 Home Clunkers and banks holding properties off their balance sheets by only defaulting and not starting foreclosure procedures (as #128423 cited) are likely the only reasons that map isn't more red.
The housing market right now is just as removed from reality as the stock market.
I don't think that GSE renters program is going to work too well.
Who wants to live in a daily reminder of personal financial destruction.
As a rule Sheep don't like to live in the slaughter house they prefer open pastures.
Deed in Lieu of foreclosure is best for the banks, and if a lot of home owners go for it the talking heads will be able to crow about how much sunshine is now in the Real Estate market.
But I doubt it'll work.
Who was buying all those houses in California, Nevada, and Florida to begin with? To me it's never been a coincidence that those are the three biggest tourism states - the latter stage of this whole 2003-2006 "boom" was built on the nth-derivative waiters and entertainers dependent on gratuities from the moderately wealthy purchasing houses and hoping tips held up. Despite the supposed flexibility of our labor market, our economy's integration has strengthened correlations over the years.
On every app I'm sure the "primary residence" box was checked.
"I primarily live in seven different houses now. Breaks up the boredom"
Spot on.
In Vegas, you had bartenders and housekeepers buying 300k houses.
I remember hearing over and over how Vegas was the fasting growing city in the country, but there was no new industry to support that growth. The main employers were still the casinos.
What was really happening was the bubble feeding off itself. RE Agents, homebuilders, Mortgage Brokers who were making great money during the boom started buying houses, themselves, predicated on the assumption that their boom income would continue forever.
+1
Henderson was one of the fastest growing zip codes for a number of years. Who knows why.
If you lived there you'd know why.
All the California money needed a place to go. Along with the LA gangs we got carloads of California speculators buying phase 1 and phase 2, waiting for the construction to finish and then flipping out at 2x or 3x the initial purchase price.
It was crazy.
Ah! Perhaps you're not at that boomer age where you've sat in a room w/people declaring that they didn't know which one of their 5 houses they should declare as their primary because circumstances were forcing them to change. We've got a few neighbors with nice homes in our town w/a 15 min commute to town and 2nd equally as beautiful waterfront home 10 miles, yes only 10 miles! up the road. Why not just live on the water and commute an extra 15 minutes? That's not their entire collection either. It was all the rage to collect them....kind of like Matchbox cars or Thomas trains. I'm convinced most of those defaults in touristland are to out of staters, probably more than a few of them my neighbors.
"The question of whether this is due to aggressive loan mod ..." The answer to this is no. It is most likely due to the foreclosure moratorium. Mark Hanson (Field Check Group) writes about it in his blog: http://mhanson.com/blog
From Marks blog: "
The number of trial mods is quickly approaching 500k. If the HAMP performs worlds better than other mods and only 33% fail their trial mod, then up to 166k foreclosures are coming soon. With foreclosures in the US average roughly 75k per month over the past 6 months — and most loan mods that fail being foreclosure-ready — this could double foreclosures over a very short period of time.
But the fact is that over the period of 9-12 months, most HAMP mods will fail based upon historic cure and re-default rates making HAMP the largest can-kicking experiment to date. When HAMP is acknowledged as a failure the only place left to go will be massive principal balance reductions, which will cause a whole new set of problems — about 3 trillion of them."
And don't forget the onslaught of FHA foreclosures that will come in the near years as we've continued to "kick the can" down the road and right into the taxpayers head. As the FHA made painfully clear today things aren't so rosey in their world. However, should we be surprised? Currently you can get an FHA loan for 3.5% down, but don't forget that once you put that down the 1.5% premium for MI is rolled into your loan so on a $100,000 house you put $3500 down, but then the premium is added back onto your loan so you walk out with only about 2% equity.
In most markets, prices could drop 2% in the wind blows the wrong way so how long until this whole mess blows up? Can someone explain to me why you should be able to buy a house for less money down than buying an average priced car?
I was going to recommend Mark Hanson's blog as well.
He posts about once a month and has been explaining the disconnect between the bad economic environment and the unexpectedly low foreclosure numbers for a while.
Catherine Austin Fitts interviewed by GoldSeek's Chris Waltzek
They discussed the looting and centralization of the United States and what can be done to stop it.
http://www.radio.goldseek.com/players/fittsplayernov11.php
This is simply the calm period between subprime resets and pay option arm resets. Also banks don't want to be forced to take the mark on over priced resi loans on their balance sheet by selling foreclosed homes. Therefore, they are slowing down the foreclosure of homes.
when does the moratorium end?
I over heard a conversation at a restraunt last week where this lady was talking about being forclosed upon like it was no big deal. The conversation started out with "Our house is being forclosed upon just like everyone else" These people think this is the new normal and there are absolutly no consequences for it.
The Bail Everyone Out Government has no idea what they have gotten us into!
Strategic defaults are becoming the New SubNormal for CA, NV and AZ for sure. People who are hopelessly and seriously underwater look at a time horizon of 10 years in debtor prison to get even or 10 years of bad/no credit. Then they choose the latter, thinking they'll get a pass on their credit scores for an extenuating circumstance somewhere nearer down the road anyway. Lots of rental availability and getting cheaper everyday. Landlords are looking the other way on SDs if you still have a steady job and most of your other payments are current.
For some, the HELOCs go down the tubes, too. But at least they have the title to a free and clear vehicle. Lots of people bought vehicles with HELOCs for the tax advantage in the high appreciation states.....especially CA. For the banks holding the HELOC second, the value is absolutely ZERO.
I don't condone any of it.......but it is what it is.
A coworker is stopping mortgage payments starting now. She is so far underwater that it makes no sense.
This is the new normal:
the banks loaned me the money on the understanding that I'd pay them back
if I don't pay, they get the house back
I'm choosing not to pay.
they can have the house back.
A damaged FICO score is pretty small potatoes compared to hundreds of thousands of dollars.
Squatters are now renters that will not pay rent but will have their house maintained by the government. This should keep the property off the books for another few years. The problem is most Americans want a hand out so they will forclose just so they can squat and then not pay rent. We have created a MONSTER! Backed by the government. The control freaks in government want to control people's housing just like everything else. It reminds me of the Pink Floyd Song " Mother".
Hush now baby, baby, don't you cry
Momma's gonna make all of your nightmares come true
Momma's gonna put all of her fears into you
Momma's gonna keep you right here under her wing
She won't let you fly, but she might let you sing
Momma's will keep Baby cozy and warm
Oooo Babe
Oooo Babe
Ooo Babe, of course Momma's gonna help build the wall
Hush now baby, baby, don't you cry
Momma's gonna check out all your girlfriends for you
Momma won't let anyone dirty get through
Momma's gonna wait up until you get in
Momma will always find out where you've been
Momma's gonna keep Baby healthy and clean
Oooo Babe
Oooo Babe
Ooo Babe, you'll always be Baby to me
Only difference is I enjoy listening to Pink Floyd
..
~
http://www.youtube.com/watch?v=r9rYXZnoMn0
The puppet show continues. Many are still in homes but have not made a payment in many months. Yet foreclosure has not commenced yet.
More "hiding the ball" tactics by the banks (at who's command?). An examination of the delinquency numbers should accompany this.
The Fed is reflating the system, and if they succeed, most asset prices will be higher 3-5 years from now. This includes real estate, whose recovery is crucial to the recovery of the banks and the entire economy. It may be time to start looking into foreclosured real estate bargains!
time123
admin: http://invetrics.com
Go peddle your sales pitches some where else!
inflate deez nutz
+1
Hey, don't hate him for pitching his system...
Hate him for not stating the whole issue.
That is, if the Feds don't succeed, then at best, RE is a dead investment for at least a decade, and at worst (or very best, if you're a scrap-and-builder like me), the whole shebang goes up like a Diet Coke gorged Suez-max tanker injected with 50k tons of Mentos.
An acquaintance sent the keys in July-Aug 09 after several months of no payments, declared BK, and moved out.
The bank has yet to take any action. He still gets letters from the city that "his" lawn needs mowing.
He has even tried to contact the mortgage holder to get them to take back the property. No response.
This is why foreclosures are down. The foreclosure process is overwhelmed and banks have no incentive to get it moving (and a lot of incentive not to).
amazing, isn't it, the guys asks to have the property taken back, and no repsonse.
meanwhile, the property sits and decays.
Ordinary folk have stopped paying their mortgages because they know what's coming next for them.
Why fork over money for a house that you will be taxed out of, anyway?
Very interesting, most of the comments on this story are spot on, a big change from a few months ago.
People are starting to get it:
-the "foreclosure" numbers are becoming meaningless, due to the moratoriums, etc. A much better yardstick is delinquency rates, which continue to rise.
-"walking away", or even better, stopping payment on your mortgage and staying in the house, IS the bailout for the common person.
-when you get a mortgage, you are paying for an implied "put option" on the mortgage (otherwise Fannie/Freddie wouldn't charge guaranty fees). Excercising that option is not immoral.
The laws of unintended consequences are taking effect in the housing market, in direct opposition to what the government wanted to happen.
From Bill Moyer's interview with K. Blackwell: 500 FBI white collar investigators pulled off the potential mortgage fraud situation ripening in early 2001, with recent rise in home values. These guys were never replaced and instead were sent to discover what type of toilet paper Bin Laden was using in his Afghani cave.
I have no problem...with the unpaid BofA unsecured line of credit, watching them discount the balance due from $9000 to $3300 in 4 months. Hmmmmmm.
Upon closer inspection of the "foreclosure map," it's encouraging to discover that there is significant areas of the country that seems to have little problem with foreclosures! You know, meccas like west Texas, western Kansas, much of Nebraska, the bad-lands of South Dakota, most of Wyoming, a whole lot of Montana, and even parts of Oklahoma, New Mexico and Utah! These must be the areas where "Obama's Stimulus Package" is most effective! (How's that for White House spin? Hey Barack, I want a WH PR job!)