Foreclosures About to Soar Near-Term — Easily Back to All-Time Highs
Are you ready to see the future? Ten’s of thousands of foreclosures are only 1-5 months away from hitting that will take total foreclosure counts back to all-time highs. This will flood an already beaten-bloody real estate market with even more supply just in time for the Spring/Summer home selling season – great timing!
For months prior to March, banks/servicers were on and off of foreclosure moratoria with many on a complete hold awaiting Pres. Obama’s plan to save the housing market and homeowners. We track each foreclosure start through the entire foreclosure process individually and in aggregate — also by originator and servicer — and as soon as the Obama plan was made known, banks/servicers shifted their Notice-of-Default and Notice-of-Trustee Sale machines into overdrive.
Foreclosure start (NOD) and Trustee Sale (NTS) notices are going out at levels not seen since mid 2008. Once an NTS goes out, the property is taken to the courthouse and auctioned within 21-45 days.
NOTE – actual March foreclosures reported next week by the popular foreclosure services like RealtyTrac will show a sizable drop vs. Feb because foreclosures lag notices. Foreclosures in March are a result of NTS’s when many banks/servicers were on hold in Jan/Feb. But in March NTS’s surged — I will have a preliminary report out this week on the total statewide and national counts. BE CAREFUL – the popular reports released next week will also show a large increase in total foreclosure notices so total foreclosure activity may be relatively flat. Market reaction will be dependent upon how this is reported in the press.
The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium — this wave is so big I would not put it past them trying it.
CA foreclosure background – in mid-2008 the foreclosure wave was building was artificially held back as a result of the CA law SB1137 enacted in Sept 2008. This also kept NOD’s and NTS’s at much lower levels than the actual defaults that were occurring. Other bubble states and several banks/servicers also went on random moratoria and the foreclosure wave was held back for the past six months. But just like so many other intervention and moratoria in the past, the problem just comes out the other side even more violent than if they would have done nothing. Adding insult to injury, the GSE’s announced this week that they were coming off moratorium, which could increase foreclosures by 20-25% alone.
The headlines in the near future will read:
- Circa April 12th – “March Foreclosures Drop Sharply but Foreclosure Starts at Record Highs”
- Circa May 12th- “April Foreclosures Surge 200% and Foreclosure Starts Remain at Record Highs”
Two months from now, the foreclosure crisis will be top of the news once again catching everyone off guard because of the past six months ‘intervention’. Thanks Washington.
The chart below highlights the top servicers in the nation and their monthly NOD, NTS and REO counts. As you can see, they all have gone through various foreclosure moratoria in one or more foreclosure stages in the past year but since the Obama plan was made known, volume has soared.
Note - the NOD phase is 5-7 months away from foreclosure and the NTS phase 21-45 days away. The REO column will grow significantly in near-term months due to the surge in NTS in March and coming in April.
The counts below are servicer stats and in no way represent the number of loan defaults a insti might be experiencing on balance sheet – I have other charts for that!
For those of you that are curious as to total counts of new loan defaults bearing down on the state, the following is a 2-year chart of new NOD’s. March brought the first 50k+ count ever. From here the banks and servicers will try anything they can to get borrowers into mortgage mods before the Notice-of-Trustee Sale in filed 4-5 months down the road but ultimately most will make it to foreclosure sooner or later.
But this time around the mix has changed. Mid-to-upper end loans — and homes attached to them — are going into the foreclosure process at the greatest rate ever. The following chart shows defaults on loans over $750k. This is trouble because the demand in the segment of the market is outpaced by foreclosure supply alone – where does that leave Ma and Pay Homeowner?
Lastly, the following NTS chart shows properties within 30-days of going to the actual courthouse for foreclosure sale. This massive jump from Feb is likely the beginning of the wave I have been awaiting that will carry foreclosure back to all-time highs within three months.
**For more information in our default/foreclosure related research including real-time mortgage default, foreclosure and loss tracking across large-named publicly traded companies please email me at the address below. Looking ahead of the housing and mortgage market and into bank’s residential mortgage portfolios and balance sheets is now much clearer.
Best Regards,
Mark Hanson
Mark@TheFieldCheckGroup.com
Analysis by Mark Hanson, Field Check Group Real Estate & Finance
Data in partnership with ForeclosureRadar.com
April 7th, 2009 at 1:53 pm
Mr. Mortgage…great post! Could you please clarify something? When these moratoriums are in place…do the banks stop issuing NOD’s, or do they issue NOD’s, but not the true foreclosure/teeth of the NOT’s. I’m just curious, if they’re allowed to get the NOD 90day aspect out of the way, or if it’s a freeze on the entire preceedings. Any help much appreciated.
April 7th, 2009 at 2:20 pm
it is all servicer specific – they dowhatever they want. Some suspend all 3 phases, some suspend 1 and say they are on moratorium etc. I quit trying to reason why, I just try to prove a lie! Haha.
April 7th, 2009 at 4:49 pm
Mr. Mortgage, I just found your new blog from someone mentioning it over on the O.C. Register real estate blog. You gotta get the word out, buddy! Maybe Patrick will link to one of your new posts? I am bookmarking this new site. Glad to have you back. It gets lonely being such a big bear…
April 7th, 2009 at 4:50 pm
…meant to say I was an avid reader at your former location, and I’m guessing there are thousands more like me, that do not know where / how to find you now…
April 7th, 2009 at 9:51 pm
Perhaps I should hold off my bid on a local short sale and wait for a nice REO coming soon? 95037
April 8th, 2009 at 5:10 am
Hi Tom – I have a subscriber list to 10k – just waiting a bit while I finish up a large project. Once I start this up again, it is a very time consuming task keep it up…I love doing it but it adds a few hours to every day.
April 8th, 2009 at 11:19 am
there u are! mr mort u r back!
April 8th, 2009 at 1:45 pm
Glad I found you again Mr. Mortgage! Thanks for your great analysis.
April 8th, 2009 at 2:57 pm
Glad to see your up and running.. Tickerforum post notified me.
Can’t wait to hear more from ya..
April 8th, 2009 at 4:50 pm
Great article. Got the link from Tickerforum.
April 8th, 2009 at 5:16 pm
Hey hon, nice new home! We’ve missed you. Awesome article….a little truth to expose all the BS out there. Thanks for all you do!
April 8th, 2009 at 7:21 pm
Great work, you gonna get this info to CNBC (or wherever Ratigan ends up):-))
April 8th, 2009 at 7:40 pm
Are any homeowners having success in Court challenging the Lein via Fraud / misrepresentation / records production? (Curious as to where these ’stats’ may be found. If a swell-up of sheeple is to occur to stem this plunder, cases will have to be won, imho…???
April 8th, 2009 at 7:46 pm
Thanks Mark! Great research! You might want to send your subscribers an email with your new web address as I didn’t know you were up — found out on TF
Granite Bay CA is TOAST
there are a ton of 1M+ homes on the market already and nothing is selling- only 4 homes in the last 3 months
and from what I can tell on MLS, the ONLY ones selling in the surrounding areas is REOs
I still remember reading that you said that a 1Mill home will only be worth 300K
— once in a life time!
April 8th, 2009 at 9:30 pm
Mr. Mortgage,
Great to see you back. We were getting worried.
JAllen
April 8th, 2009 at 10:20 pm
Mark, very good analysis. Please keep us updated. Sources of unbiased data and analysis are shrinking very fast. It is very important service you providing to average Joe.
April 8th, 2009 at 10:29 pm
Like everyone else I am glad to see you back!!!
April 8th, 2009 at 10:51 pm
welcome back! and thank you! I was getting worried, too.
April 8th, 2009 at 11:03 pm
So glad you are back! I was finally convinced that you were gone! Thanks again for all your work!
April 8th, 2009 at 11:48 pm
hey marc, thanks for all your insite its been a pleasure you saved me a ton of dough over the years i unloaded all my propertys that i bought in the mid 90s after listing to you menny mahalos aloha
April 9th, 2009 at 2:57 am
Mr. M.,
A must read for those looking to buy OR rent in California. Thanks for your work.
P.
April 9th, 2009 at 8:03 am
The Wells Fargo 1Q earnings hint today doesn’t pass my sniff test, all these risky WFC/Wachovia/GoldenWest loans will come a cropper. I think the bank mortitoria & shadow inventory are all gamesmanship related to Geithner’s toxic plan. How low can RE prices go with another wave of forced selling occurring while unemployment breeches double digits.
Glad you’re back, you’ve been missed
April 9th, 2009 at 8:03 am
Mr. Mortgage,
I live on the east coast. Can you give me an ideal how the national situation looks? Is it any better or just as bad as California?
Thank you for your insight.
April 9th, 2009 at 8:39 am
Hello Mr. Mortgage,
I have come to your site for the very first time. I am planning to buy a property in Redondo Beach and the prices have come down only 25% so far from the peak.
What is your suggestion? How much do you think the prices will come down and till when I should wait?
April 9th, 2009 at 8:45 am
Hopefully, by now, Susan Day Minerly has updated her proposal to end the crisis. Susan, I have missed your posts almost as much as Mr. M’s.
April 9th, 2009 at 9:26 am
People were saying you were afraid what you said was wrong so you disappeared. Glad to see you back.
April 9th, 2009 at 9:27 am
Mr. Mortgage,
Do you have access to April data yet? How is it trending this month?
Thanks…this is great info to know.
April 9th, 2009 at 9:41 am
Hey Mr. Mortgage
So happy to find you again – thank you profusely for sharing your savvy with us. It helps keep me sane. Bless you, your family and your endeavors.
April 9th, 2009 at 9:56 am
Welcome back, we missed you.
I agree with #22. WFC can report all the good news, but nothing on the Golden West portfolio. Smoke and mirrors.
April 9th, 2009 at 10:47 am
Mr. Mortgage: Your column is appreciated and helpful. A question: Periodically there are comments that banks are dealing directly with investors (individuals or larger entities) to cherry pick foreclosures that never reach the public (presumably at auction). Is it possible for banks to do this? If so, at what point in the process does this occur? Thanks.
April 9th, 2009 at 10:59 am
Mr Mortgage,
Would the banks be able to hold on to some of these homes and not let them flood the market? I read another article where it says banks might do this to prop up prices and reduce inventory. What do you think?
Michael
April 9th, 2009 at 11:05 am
Hey Tom – do yourself a favor and get Google Reader and then subscribe to blog feeds. That way, the news will come to YOU!
April 9th, 2009 at 11:33 am
Hi Mr. Mortgage
Glad to have finally found your site again. It was posted on SDL.
April 9th, 2009 at 12:14 pm
JALLEN,
regarding Redondo Beach, Read again the entire post and concentrate on what the data is telling you.
There is a major downward pressure on Westside pricing building right now. Stay in your rental.
MR MORTGAGE IS BACK!!!!! yeah baby!