The foreclosure wave is here — look beneath the headlines
- Notice-of-Trustee Sales are up 100% from Feb to May and subsequent foreclosures are up 75% from March to May.
- CA foreclosure activity outpaces total house sales by 100% – infinite supply
**We chose one of many weekly research reports and notes for this blog. For more information on our variety of absolutely unique research offerings please see the website.
In early April I was digging around my default and foreclosure database reviewing servicer and originator specific foreclosure numbers and noticed that a couple of the nation’s leading servicers were acting funny. At that point, most servicers had been ratcheting up Notice-of-Defaults for three months while scaling back sharply on filing new Notice-of-Trustee Sales. Subsequent foreclosures had been bouncing off of year and a half lows since October. Based upon the evidence from the two previously mentioned large-bank servicers, I then made the call about a wave of foreclosures about to hit.
The wave is here even though it did not show up in the aggregate numbers released by RealtyTrac yesterday morning. In their report, CA aggregate foreclosure activity was reported down 4.46%. That is not accurate.
There are three stages of foreclosure, which we track religiously every day. Because each stage is separated by a period of up to 4-months, the mix can change dramatically causing the aggregate to move in the opposite direction of present conditions. Additionally, back in 2008 most servicers all did things the same way at the same time. Now, each bank and servicer has their own agenda so the monthly numbers are much more volatile, which can lead to misinterpretation.
In May, aggregate foreclosure activity was not down 4.6%, rather up 13.5%. On a more granular level, the takeaways are that Notice-of-Trustee Sales are up 100% from Feb to May and subsequent foreclosures are up 75% from March to May – these are significant events. Especially when considering that the housing market at the low end has been benefiting in part by the lack of inventory caused by the Q4 2008 – Q1 2009 moratoria.
The Waves
The chart below shows aggregate foreclosure activity of all three foreclosure stages. The red and yellow lines — Notice-of-Trustee Sales (stage 2) and actual foreclosures (stage 3) respectively — are the wave. In the past three months NTS and foreclosures have surged, as evidenced by the red and yellow growing twice as large. Again, notice-of-Trustee Sales are up 100% from Feb to May and subsequent foreclosures are up 75% from March to May.
So, why aren’t foreclosures up 200% – 300% from March and back to all-time highs, as the March through May Notice-of-Trustee Sales surge would indicate? It’s because of capacity and timing.
We know for a fact the GSE’s and several servicers came off moratorium around the time that Obama made public the Home Affordable mod and refi programs at the end of March. From there the servicers had to make the decision to participate, integrate the new borrower modification and loan decisioning and slotting technology and train staff. If this took 6 weeks, which would be incredibly fast, then in the second week of May they would have started re-qualifying and contacting the back log of distressed borrowers with the new loan mod, workout and refi offers. Then they have to give the borrowers a reasonable time to accept or deny. It is only June 11th — there simply has not been enough time. But early foreclosure numbers for June show the foreclosure ramp remains intact.
The chart below breaks out only the Notice-of-Trustee Sales and actual foreclosures, stages two and three. When viewing it this way, the surge in NTS and foreclosures since Feb and March respectively is obvious – each stage up 100%!
The Notice-of-Trustee Sales and foreclosures will continue to come. Notice-of-Defaults — the first stage of foreclosure and the earliest leading indicator of everything mortgage, housing and balance sheet related — have been hitting record highs since December.
The past 6-month NOD average is 45k…the 6-month average for the worst time in the summer of 2008 was only 43,500.
The subsequent foreclosures that come from this latest 6-month NOD surge will hit about the same time a mortgage mod re-default surge from the 2008 NOD surge does. At this point if new NOD’s have leveled out or even fallen by 50%, the re-defaults from bad loan mods made when mods were new and even more reckless than today will keep foreclosures as headlines through next Spring at least.
The following chart is of monthly Notice-of-Trustee Sales (second stage) showing the bleed over from the Notice-of-Defaults in the previous chart. NTS are back at all-time highs. Holding back all of these foreclosures will be an impossible task through modifications alone. This is the wave.
The chart below is of actual foreclosures. Foreclosures follow the NTS stage by 14-60 days. From the March lows to May, foreclosures have almost doubled. This highlights the bleed over from NTS that will continue. Early June results already show a 10-month high foreclosure run-rate of in the low 20k’s.
Lastly, the following shows total CA house sales vs. total CA foreclosure activity. The blue lines reflect total foreclosure activity and red lines, total sales. This chart clearly highlights how much of a supply problem that foreclosures are and why there is such a push to kick the can down the road through moratoriums and by modifying America.
**We chose one of many weekly research reports and notes for this blog. For more information on our variety of absolutely unique research offerings please see the website.
Best Regards,
Mark Hanson
Mark@TheFieldCheckGroup.com
Data provided to Field Check Group Real Estate & Finance by ForeclosureRadar.com
June 14th, 2009 at 9:23 am
MM,
You’ve got 20 years experience in the mortgage industry.. what was your role? How many bad loans did you make? Why weren’t you screaming this in 2003..to prevent today’s situation? In any situation, thanks for your “dramatic” picture of the situation today(against government’s efforts to change perception) to bring prices back to a normal level!
June 14th, 2009 at 10:12 am
MM,
1. thanks as always.
2. I had a productive week, asking Mish to put you on his blogroll.
3. Just saw the DataQuick by county and CA city medians showing serious continuing meltdown.
4. I believe Case/Shiller futures is predicting further 10-15% drop to 2001 prices in 2011.
5. Nice piece on Ticker, Hedgie, have you considered getting blogtalkradio?
June 14th, 2009 at 11:07 am
California imposes 90-day foreclosure moratorium to begin Monday June 15, 2009
June 14th, 2009 at 2:52 pm
Fantastic analysis, as always.
Thanks for what you do Mark!
June 14th, 2009 at 4:07 pm
Thanks!
It is such a joy to read these clearly written articles stuffed with charts and facts.
Mark, do you have a comment on the new moratorium?
Does it prevent all 3 stages or only the final foreclosure?
How will banks survive with people not bothering to pay on their mortgages?
June 14th, 2009 at 5:45 pm
On the last graph, where “The blue lines reflect total foreclosure activity and red lines, total sales. ” …I don’t see a red line.. is that a mistake?, or no sales? Appears you may have missed a bar!
June 14th, 2009 at 5:47 pm
I would like to hear your opinion on the new moratorium also. Thanks.
June 14th, 2009 at 5:50 pm
Also, I don’t see the “The red and yellow lines” in the first graph. Thanks for these posts, they are awesome.
June 14th, 2009 at 5:54 pm
Hi Mark, I think we’d all appreciate your insight into how the 90 day moritorium impacts the 3 stages.
June 14th, 2009 at 5:56 pm
Mark,
Disturbing trend in some counties in CA (I’m from Orange County): banks are moving forward by an average of 25 days the first foreclosure letters. Some of the larger banks in OC are sending out first notices if they have not received that month’s mortgage payment. One of my banking friends say that they (the banks) would rather take the “hit” while their balance sheets still contain toxic assets (CDO tranches, etc.), with the hope that writedowns can take place as soon as possible.
June 14th, 2009 at 8:02 pm
Great work as always MM!!
June 14th, 2009 at 8:06 pm
Mark,
I am one of the few “true” forensic auditors out there, doing real things. Just a couple of comments on what I am seeing.
Lenders are definitely not cooperating in trying to get mods done. They are using every tactic in the book to try and delay the mods, until they can foreclose.
Principal reductions are still almost non-existent.
Probably 20-30% of the Notice of Defaults are actually unlawful under CA law, and my attorneys are now attacking lenders on that basis.
A disturbing new tactic is that Greenpoint and other servicers will “sell” the servicing rights to Countrywide just before the NOTS is filed. The resulting transfer in paperwork delays any ability of the borrower to work on a loan mod during that time, usually 2 weeks in duration. This results in borrowers usually losing the home at the Trustee Sale.
The new moritorium will have little effect. There is a provision that if the lender has already gotten a loan mod plan in place, then they can get an “exemption” to the regulation from DFI. ( I am sure that most lenders already have that in place.)
Also, if a borrower is working on a mod through a loan mod company or an attorney, then they do not qualify for the moritorium.
June 14th, 2009 at 8:59 pm
kim and patrick, can you go more into the new moratorium? How is this one different to the previous moratorium?
June 14th, 2009 at 9:18 pm
Some things
1. If the borrower has a first and second mortgage, the second must be willing to subordinate to the first again.
2. Full Income Documentation
3. Borrower is cannot be working with any company or law firm to modify at time of default.
4. Debt ratio of 38% for Housing. 55% Total Debt Ratio.
5. Only needs to include two “features”.
6. Not required to modify if it breaches the Pooling and Servicing Agreements.
7. The law applies to those servicers who do not have a comprehensive loan mod program and have applied for and received an order from DFI exempting them from the regulations.
Bet about every servicer already has that exemption. If I were a servicer, I would have gotten it.
Let’s be honest. Does anyone really think that the CA government has any real intention of helping the people out?
I can drive a truck through all the loopholes in this law.
June 14th, 2009 at 10:27 pm
Patrick, so what’s the bottom line? Will a new wave foreclosures hit soon? Kim had said that we’ll see big numbers in July, but will the new moratorium affect this?
June 14th, 2009 at 10:48 pm
great work mark ! just talk to a real estate broker today ! he said housing has bottomed and only going up from here ! he exspects housing to rebound to 05-06 prices in the next 2 or 3 years ! better hurry he says ! i cant say all the words i used on him but be ashured i got the point across! these realtors amaze me ! complete denial !they cant be trusted ! all they care about is there pay check and who cares if the client gets screwed ! i look forward to the day realtors are fazed out . anyone with a 3rd grade education can get a real estate license! thats the problem !
June 14th, 2009 at 11:19 pm
Mark,
Thanks a ton for your emails and everything that you have done over the past 1+ year. I’m saddened that you are not trying to be mainstream anymore w/ your very first blog/youtube videos and your move to the implodometer. I hope you do not stop blogging until this mess is done with. We all greatly appreciate reading your work more so than we could express in a comment/email.
Best Wishes,
Michael
June 15th, 2009 at 1:22 am
Everything that Mark says, I agree with fully.
I am now seeing the beginning wave of the Option ARM resets. Usually 2005 or 2006 vintage. 110% Negative Amortization.
Plus the 5/1 and 10/1 ARMs. Few 2 years left.
June 15th, 2009 at 5:17 am
how is obamas and tax cheat timmys, making homes affordable program working out for everyone ?
June 15th, 2009 at 6:54 am
MR MARK (MR MORTGAGE)
THANK YOU FOR THE FACTS FROM CALIFORNIA.
CAN YOU SOMEHOW GIVE ME (AND ALL YOUR SE USA READERS) SOME FACTS LIKE THESE FOR SOUTHERN FLORIDA, ETC?
AND HOW ABOUT FOR THE GREAT USA?
MY BIGGEST QUESTION IS: WHEN WILL I BE ABLE TO SELL MY INCOME REAL ESTATE FOR THE PREVIOUS HIGH?
RVG, SEEKING ALPHA IN HIS ARTICLE: “WHEN WILL HOUSING PRICES RETURN TO PREVIOUS HIGHS?” SAYS: “I BELIEVE IT’S GOING TO BE AT LEAST 10 YEARS.” HE GIVES US CENSUS BUREAU “VACANT HOUSING UNITS” INFORMATION AS HIS BASIC PROOF.
PLEASE GIVE US YOUR OPINION SO WE CAN BASE OUR INVESTMENT DECISIONS WITH FACTS.
June 15th, 2009 at 7:22 am
90 Day moratorium has a loophole. If the bank has a loan mod program in place they are exempt, which most do. It will not
do anything but give politicians media to pretend they are helping homeowners.
June 15th, 2009 at 7:23 am
Also my banker said he expects rates to rise to 8-9%
That doubles the cost of owning a home from a month ago.
June 15th, 2009 at 7:52 am
Good call, Kim. I agree.
Housing values, depending upon the areas, CA, Fl and others, will likely NOT return to previous highs for 15-20 years, if that. Appreciation should be in the neighborhood of 3-5%, and no more, in the best areas.
Add to this that the bottom will not occur until about 2012, and then have 2-3 years minimum for inventory to clear, and you get the picture.
June 15th, 2009 at 8:40 am
“ME”, not all realtors are as bad as you say.
“anyone with a 3rd grade education can get a real estate license! thats the problem !”
Not exactly, but if you felt this way, why did you call one in the first place?
June 15th, 2009 at 10:00 am
Wonton, our system has problems! I don’t think “ME” said they’re all bad.. he said:
“anyone with a 3rd grade education can get a real estate license! thats the problem !”
Stop twisting everything.. (do you work in real estate? feel guilty?)
Can you address this, as he clearly pointed out:
great work mark ! just talk to a real estate broker today ! he said housing has bottomed and only going up from here ! he exspects housing to rebound to 05-06 prices in the next 2 or 3 years
do you believe what the real estate broker said???
Are you watching TV, news? or just this blog? Do you see Obama, trying to reform.. the SECURITIZATION market of the real estate loans.. as apparently they’re part of the BLAME.. all this commisions, with no accountability..
June 15th, 2009 at 10:08 am
Patrick – very interesting
Michael – just trying to make a living out of this vs a hobby so have to work privately with insti investors. At least I am able to continue to put out free content. Most don’t know this but it takes hours in a day to keep a blog fresh with content — and they make very little money. Even guys like Mish that get 50k people a day on can’t make a living from free information distribution. Have a family to feed.
June 15th, 2009 at 10:52 am
I’d like to offer some anecdotal evidence. I have been looking at houses to buy as a house to live in. The recent “multiple offers” on REO properties in Los Angeles are due to these properties being marked below all the other overpriced crap on the market. However, the most annoying thing is that whenever I have been interested in a particular property my realtor has consistently advised me that I’d have to offer more than the asking price to get the property. It was cited “there are multiple offers”. Most times I didn’t even bother putting in an offer. Now, the really interesting fact is that I can now see the actual sale prices for these properties and these prices are all lower than what my realtor advised me to offer!!!! Which goes to tell you that you really have to hardball these realtors no matter what!
Anyway, I seriously believe that properties will go down more so I wasn’t that dismayed not to buy a house. And more anecdotal evidence supporting that belief is that I have a friend who has not paid any mortgage payments since October and has a lawyer working on her case to pressure BofA for a 40% loan mod. Ridiculous. I sure wish that I could live rent free in Los Angeles for 9 months. I’d have lots more disposable income!
June 15th, 2009 at 10:57 am
WONTON …..this particular broker is a friend of a friend ! i did not got to a broker to get information ! that is the last person i would go to ! im not saying all are bad and mislead the public .but I can unequivocally assure you that most do ! ive been developing and investing in real estate for over twenty years . i know the market inside and out ! i saw this disaster coming back in 2003 and prepared myself for it . I cannot count how many times that a real estate agent and or broker has tried to pull a fast one on me ! and yes i may have exadurated one attaining a real estate license having only a 3rd grade education ! but i personally know two agents that dropped out of school in their 7th and 8th grade year ! one of them has a brokers license! funny thing is , i actually like this guy . he’s one of the few i actually trust . but he is very uneducated .he passed the real test by memorizing the practice test he had purchased and hoping for the best ! so just about anyone can get a license if they put there mind to it !
June 15th, 2009 at 11:32 am
“i saw this disaster coming back in 2003 and prepared myself for it . I cannot count how many times that a real estate agent and or broker has tried to pull a fast one on me !”
Oh geeze “ME”, if you SAW this coming in 2003, why didn’t you BUY in 2003 and sell in 2006? Better yet, why didn’t you tell ex_owner? The poor man could have used your help. lol
Sure, looking back, we’re all geniuses and KNEW all this was going to happen.
“ive been developing and investing in real estate for over twenty years . i know the market inside and out !”
What is your educational background “ME”?? Think carefully before you answer.
And ex_owner, if you didn’t KNOW that the market was going to crash at the peak, how in the heck do you KNOW it’s going to crash now, after a 40% drop?
June 15th, 2009 at 12:18 pm
Wow, Wonton, not too snarky, are we??
Anybody could have seen the peak in 2003… who could know how insane the prices would get by 2006?
Patrick, thanks for the “insider” information and Mr. Mortgage, thanks for all the work you do.
The realtor system is broken anyway, because being commission-based it always incents (all of) the realtor(s) to work for the seller, not the buyer. And apparently the NAR have some kind of lock on the listings (MLS) so it is virtually impossible for any new players to break in with a new business model for helping people buy/sell houses.
June 15th, 2009 at 12:28 pm
TO WONTON AND EVERYONE BASHING REALTORS:
I WAS A REAL ESTATE BROKER FOR EIGHT YEARS, AND MY WIFE A “REALTOR”.
MY EDUCATION IS A MASTERS IN MANAGEMENT AND ECONOMICS AT FAU.
IN THE 47 YEARS OF BUYING, REMODELING, AND RENTING INCOME PROPERTIES MY THEORY WAS: DON’T USE A BROKER. DEAL DIRECT WITH THE SELLER.
DID WE MAKE ANY MONEY ON REAL ESTATE BROKERAGE? NEVER.
EXAMPLE OF DEALING WITH AN OWNER: 15 UNIT APARTMENT ON THE ATLANTIC OCEAN. COMPS $120K PER UNIT = $1,800,000. (ACCORDING TO THE BROKERS AND THE COMPUTER COMPS). PURCHASED IT FOR $950,000., DIRECTLY FROM THE OWNER, OR JUST ABOUT HALF.
ALSO, IF YOU ARE STRETCHING YOUR CASH, WHEN YOU DEAL WITH THE OWNER, YOU DON’T NEED THAT CASH FOR ANY COMMISSION TO ANY BROKER.
WHEN YOU ARE SELLING, ADVERTISE “FISBO” AND YOU GET MORE QUALIFIED CALLS (AS WELL AS PLENTY OF AGENTS TRYING FOR A EASY LISTING). ALSO, WHEN YOU ARE SELLING, YOU HAVE MORE FLEXIBILITY IN GIVING PURCHASE MONEY MORTGAGES, AS WELL AS CONTRACTS FOR DEEDS, LEASE OPTIONS, ETC.
AND, WHO IS THAT OPTOMISTIC ORIENTAL REALTOR REFLECTING THE “IDEALS” OF THE NAR, WHO MUST KEEP PUMPING UP ALL THE BROKER SEGMENTS OF THE MARKET?
“JUST THE FACTS, MAM, JUST GIVE ME THE FACTS” SAID SOMEONE ON TV.
COMMENTS?
June 15th, 2009 at 12:31 pm
Patrick,
You said on June 15th, 2009 at 7:52 am:
“Housing values, depending upon the areas, CA, Fl and others, will likely NOT return to previous highs for 15-20 years, if that.”
“the bottom will not occur until about 2012″
My question for you and for Mr. Mortgage is this: What happens to the value of housing when inflation kicks in?
It is my understanding that the government at some point in the future wants inflation in order to collect more taxes on the higher wages in order to pay off the trillion dollar deficit.
June 15th, 2009 at 12:34 pm
A little bit of interesting first-hand info from this past week…our house (ex-house) was set to be auctioned on June 12. The balance on the 1st was ~$425k and the current market value for our home is ~$225k. To our surprise, the home did sell at auction to an investment group who is trying to flip the home for a profit. My neighbor happened to be outside when the buyers pulled up to the house. My neighbor asked what they paid at the auction and they told him that they would not discuss that. He asked for a ballpark since he lived next door and they told him that it was low enough to be able to flip it, which they plan to do. He asked what they were going to sell it for and they said, “fair market value”. He asked what they though fair market value was and they said ~$300k. He laughed and said that there are currently 5 homes on our street for sale and the highest listed price is $225k. In fact, two have sold on our street in the past few months, both for under $200k. The investors said that those were probably short sales and therefore did not represent what the actual value of the home is.
Does this story have any possible explanation other than this investment group is a bunch of kool-aid drinking knife catchers? Not only are the homes in my ex-hood foreclosing at a rapid rate, but there is a $3800/yr Mello-Roos which will cause the effective property tax rate to be 2.5-3%, depending on the County Tax Assessor’s assessment. I will be interested to see what they actually paid for the home and what it eventually sells for. Perhaps I can buy it back the next time it comes up for auction. If the “answer” to the housing crisis is to have investors buy foreclosed properties and then try to sell at a price which is completely unachieveable, this could take even longer than I thought.
June 15th, 2009 at 12:37 pm
“Anybody could have seen the peak in 2003… who could know how insane the prices would get by 2006?”
Whoah BarbP, huh?? You mean you KNEW that 2003 was the peak, without knowing that it would go up all the way to 2006? You know, the day I bought my stock, I KNEW it would go up but who could know it would go down.
June 15th, 2009 at 12:44 pm
Pastor Tom,
I don’t think anyone here feels that ALL realtors are idiots and slimy salesmen. But it is an easy and logical conclusion to make when you read listings in the MLS. They are usually full of grammatical errors, spelling errors, misused punctuation, misinformation, and awful pictures . . . not to mention an undying love of the caps lock button.
June 15th, 2009 at 12:55 pm
Barb,
I agree with you about the commission-based pay structure of realtors that there is a built-in conflict of interest for the buyer’s agent. Why doesn’t the buyer’s agent get a flat fee and the seller’s agent get a commission? Wouldn’t that make a bit more sense? I cannot fathom the logic of a situation where the seller pays the fee for the buyer’s agent, who supposedly is trying to get the best price for the buyer, and henceforth the worst price for the seller. As a seller, someone must scratch their head wondering why they have to pay for someone whose job is to low-ball them and negotiate a lower sale price.
Can you imagine having to go to court and your defense attorney is being paid by the prosecution and the longer the sentence you receive, the more your defense attorney gets paid? It is completely ridiculous and yet is essentially the same fee schedule and relationship between a buyer and a buyer’s agent in a real estate transaction.
June 15th, 2009 at 1:03 pm
Pastor Tom, I’m not sure why you included me as “bashing realtors”. I don’t think ALL realtors are bad… just most of them. lol
June 15th, 2009 at 2:19 pm
“As a seller, someone must scratch their head wondering why they have to pay for someone whose job is to low-ball them and negotiate a lower sale price.”
Partyboy, the commission is priced in, so both seller and buyer are paying. When a house is listed for $100,000, the house itself is not worth $100,000 but more like $94,000. Seller pays commissions but the buyer does too by paying a higher price for the property. In theory, that’s how it works. And although the listing agent wants to sell the house at the highest price possible, his goal is to sell it asap and not necessarily at top price. Meaning he’d rather get it sold TODAY for $500,000, intead dragging it on to MAYBE sell it at $550,000 six months later. The listing agent is not against the buyer as much as you think.
June 15th, 2009 at 3:11 pm
“Anybody could have seen the peak in 2003… who could know how insane the prices would get by 2006?”
exotic loan products
no down
interest only
stated income no doc
teaser rates
cash out refi 04, refi 05, refi,06
Summer 07 music stopped
Prince CEO of Citibank 2005
“Things are going to get interesting when the music stops, but until then we will keep dancing.”
June 15th, 2009 at 3:56 pm
“Things are going to get interesting when the music stops, but until then we will keep dancing.”
Kim, that’s a good quote
) It’s all a game and as I’ve said, we’re all players in the game.
June 15th, 2009 at 4:36 pm
Wonton,
You seem very eager to learn or itching to buy! (Puting everyone down, until proven otherwise, or a good strategy in getting the info you want)
Do you want to become a buyer (I mean player in the game..).. is it for your future benefit, or just curious by nature?
Correct me if I’m wrong, but you’ve not bought yet ever, nor do you plan on it today (with the 8k stimulus), and from what’s wrong with 450K home in Diamond Bar (your comments few weeks ago)..to waiting for 2009 or 2010, or maybe never buying.
What’s your deal?
poor man ex_owner
June 15th, 2009 at 5:30 pm
14 sold to bank today in the town I watch, 2 months ago it was 3-4 per day. 40 postponed for about a month. Here comes the Big Kahuna.
June 15th, 2009 at 7:26 pm
ex_owner, the deal is simple… we are players in the game of life. Whether you’re a buyer, seller, flippers… do what’s right for you and accept the consequences. We have choices in life and so take full responsibility for your action.
Why are you so surprise that I asked “what’s wrong with 450k or Diamond Bar”. I only asked that after you attacked somebody for wanting to buy in Diamond Bar. I thought it was quite arrogant and obnoxious of you to do so. I don’t know Diamond Bar and I wouldn’t live there but if someone else wants to live there, then I’d ask you “what’s wrong with that?”
I’m eager to learn and so I ask questions. Keep in mind though, that by asking questions, I don’t necessarily have to agree with the answers, but it’s always good to get different points of view. Like being on this blog, I think MM is brilliant but I don’t necessarily agree with everything he says.
Right now, I am looking to buy BUT I am not infatuated with owning a home. If the right home comes, then great I’ll buy. If not, I can wait. If we all turn out to be wrong and prices take off from here and I miss the boat, I can live with that too. I don’t mind being a renter.
June 15th, 2009 at 7:36 pm
Jim,
If hyper inflation occurs, then who knows? You may need a wheelbarrow of dollars to buy a loaf of bread.
Interesting result from an audit today. Lawsuit was filed and Greempoint replied to it, and to my audit since the dumbass attorney included the whole audit in the filing. Most just cut and paste.
Greenpoint attacked me personally in every way imaginable. I and other auditors are personally responsible for the courts getting clogged in lawsuits. Everything we write up is in error.
Of course, they misrepresent everything and ignore what they can’t respond to.
Nice to know that Greenpoint likes me so much.
June 15th, 2009 at 8:02 pm
Alright Wonton and Ex_owner:
My agent called and started escrow. I’m a happy purchaser buying at a 2003 price (430K).
My definition of “bottom” finding a home at 2003 prices in a desireable school district.
There may be a bottom, but all those vultures/investors and small percentage of 1st home buyers (with 20% down) waiting in line will bring it back up again.
The house I’m purchasing sold at
640K in 2006
430K in 2003
350K in 2000
Sure the price may/might/will go down further to 350K, but guess what the bidding wars will bring backup to 400K.
Thanks for the WARNING LIGHTS, but I’m in at 430K.
June 15th, 2009 at 8:29 pm
Congrats Dave, enjoy your new home. I have a few friends that have recently bought in a similar price range. They’re as excited and happy as hell.
As for me, over $400 is too much for my wallet. I’m hoping for $350 or less.
June 15th, 2009 at 10:19 pm
Thanks Wonton,
Anticipating a can of whip ass from ex_owner. The suspense is too much.
June 15th, 2009 at 10:38 pm
Can someone explain why we are comparing “Total Aggregate ForeClosure” activity against “Sales” in chart 4. In my opinion we should comparing “Actual Foreclosure Activity” to “Sales”.
If we use Chart 1 and compare it against sales, isn’t the same information counted multiple times.
House goes into Notice of Default after 4 months goes into NTS then goes into Actual foreclosure. So aren’t we counting this three times in the aggregate chart?
Can someone please explain.
June 15th, 2009 at 11:01 pm
Pastor Tom,
Please stop SHOUTING.
Thank you.
June 15th, 2009 at 11:06 pm
David The Renter
Your defintion of a bottom and the market’s definition of a bottom..maybe in conflict..however let me wish you congrats as well! and time will tell you how good of a move you’ve made in 2009
June 16th, 2009 at 1:55 am
A law you could drive a truck through!
Little relief in new California foreclosure law
By Eve Mitchell
Bay Area News Group
Posted: 06/15/2009 09:17:07 PM PDT
Updated: 06/15/2009 09:19:27 PM PDT
Lenders in California must put off foreclosure proceedings for 90 days in situations in which they have not made an effort to work with borrowers to modify the terms of their mortgages, under a state law that took effect Monday.
But don’t expect automatic or immediate relief under the law, written by state Sen. Ellen Corbett, D-San Leandro.
Lenders and loan services that already have a comprehensive loan modification program in place are exempt from the law. Such programs call for loans to be modified by lowering interest rates for at least five years, deferring or reducing part of the principal, or providing for up to 40 years to repay the loan.
“The vast majority of them are already in compliance with some regulation or requirement, either through federal laws or voluntary efforts,” said Chris George, president of San Ramon-based CMG Mortgage Services and a board member of the California Mortgage Bankers Association.
By applying for an exemption, lenders will automatically receive a 30-day stay during which state officials will determine whether the company has a proper loan modification program in place.
“If they do not have a plan in effect, they will be (subject) to that 90-day moratorium,” George said.
Sean O’Toole of ForeclosureRadar, a service that tracks California foreclosures, said he doesn’t think the law will make a real difference in the number of foreclosures. “It’s a law you could drive a truck through,”
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he said. “All you have to do is put in a loan modification program.”
The California Foreclosure Prevention Act was included in legislation passed in February that approved the state budget.
Paul Leonard, director of the Oakland-based California office of the Center for Responsible Lending, sees the state law working in conjunction with the Obama administration’s foreclosure plan that includes financial incentives made to lenders, loan services and borrowers who participate in loan modification programs.
“It’s a bit of a stick that will create incentives for the lenders and services to participate in the Obama plan,” he said.
Lynda Gledhill, a spokeswoman for Corbett’s office, said there are no estimates as to how many homeowners facing foreclosure the state law might help.
The California Foreclosure Prevention Act law applies to first mortgages taken out between Jan. 1, 2003, and Jan 1, 2008, for owner-occupied homes. CalHFA loans are not eligible.
The law is on top of separate legislation that requires lenders to wait 30 days before filing a notice of foreclosure after first making initial contact with a borrower who has missed several mortgage payments.
June 16th, 2009 at 4:33 am
You’re the best! I followed your “stuff” and sold in mid-2006. Keep up the great work. I hope you’re paid well, you deserve it.
June 16th, 2009 at 9:41 am
i can see that many in this blog dont remember the 90s recession. home prices continued to fall five more years after the recession finally ended !not to mention the unemployment ! and this recession doesn’t compare to the 90s . IT’S FAR WORSE !! WAKE UP PEOPLE !!! PRICES WILL CONTINUE TO FALL!!! BUT WAIT ,WHAT WAS I THINKING ? LETS NOT CONFUSE YOU WITH THE FACTS !
June 16th, 2009 at 10:48 am
I think the second to last graph is labeled wrong. Instead of “total foreclosure activity”, should that one say “actual foreclosure?”
thanks for all your analysis
June 16th, 2009 at 10:56 am
Regarding Comment #28 from ME.
Oh come now, ME, that “anyone with a 3rd grade education can get a real estate license!” comment is absurd and uncalled for. Maybe in other states, but here in the California public school system we all know it would take at the very least a 5th grade education to get a California RE license. And with a current LAUSD education, it would be a 9th or 10th grade education, minimum. They need time to learn to write all the letters of their name correctly and in something other than Crayon.
June 16th, 2009 at 12:34 pm
To Karl: You have a good point. The same house is counted three times in the last graph, which doesn’t make sense.
Even so, the graphs with breakdowns provide good information when compared to sales. Every completed foreclosure in excess of demand (sales) will tend to lower prices, and the effect will be cumulative until sales catches up. So the picture is really one of the volume of soon-to-be-completed foreclosures vs. the volume of sales. The only way that the sales volume will keep up with the coming foreclosures will either be a big jump in demand (something really Obama-magical) or a drop in prices.
June 16th, 2009 at 12:42 pm
Come on Steve, everyone is an idiot to you.
June 16th, 2009 at 2:56 pm
Mark, your last chart looks cool, but I’m curious what “total foreclosure activity” consists of. Is it NOD + NTS + foreclosures? If so, then the chart might be somewhat deceptive since you’re triple-counting. Check this out: a home that eventually becomes “foreclosure supply” contributes to 3 different blue lines – first when the owner gets an NOD, again (say) 6 months later at the NTS, and yet again when the foreclosure occurs. For the home sale, it only appears once. So those blue lines are maybe 3 times bigger than they should be, if you’re trying to get a sense of what the supply vs demand flow is likely to be.
It would be similar to creating a “total home sales activity” chart by adding up loan applications + signed contracts + actual sales.
June 16th, 2009 at 2:56 pm
Wonton,
I see your point and I understand that the commissions are part of the total purchase price. But I was not saying that I have a problem with the seller’s agent (listing agent) working for a commission and trying to get the highest price. That makes sense and is what I would expect if I were a seller. I have a problem with the fact that the buyer’s agent is paid a commission as well and that his/her commission is directly proportional to the selling price of the house. Basically, the more the house sells for, the more the buyer’s agent gets paid. I just think that it is a conflict of interest (for the buyer’s agent) and the agents should be paid differently. Commission for the seller’s agent and a flat fee for the buyer’s agent seems more reasonable. The buyer’s agent (and for the most part the seller’s agent as well) is not doing more work to close a deal on a $500k house compared to a $250k house but the commission is doubled. Just doesn’t make sense to me.
June 16th, 2009 at 3:28 pm
“Basically, the more the house sells for, the more the buyer’s agent gets paid.”
Partyboy, you have a point.
June 17th, 2009 at 2:23 pm
in chart 4 meant to say ACTUAL FORECLOSURES
June 17th, 2009 at 2:57 pm
The 4th graph is clear (the narrative introducing it has it right; it also jives with the other graphs); it’s the 5th graph that has people confused. Anyway, the story is there for all to see. Great work, and thanks for the info. I just hope I can get my house to stay in a little eddy off to the side, and not be part of the wave.
June 17th, 2009 at 8:27 pm
Andy, how long for you without making a mortgage payment if you don’t mind..
June 17th, 2009 at 8:37 pm
Maybe wrong wording..sorry.. I mean, are you’re part of wave 2? or future wave after that?
June 17th, 2009 at 8:45 pm
David The Renter,
I’ve got a question for you.. do you think prices could fall back to 1998’s levels? or is that completely out of the question for you?
June 17th, 2009 at 8:48 pm
I should add by 2012-2013?
350K in 2000
430K in 2003
640K in 2006
430K in 2009 good enough for Dave The Renter
???K in 2012
I’m guessing $250K by 2012, ($230k by 2013)…
June 17th, 2009 at 9:02 pm
87% of forclosures in may didn’t go to auction in cali? can someone explain that?
MM, onestly, when do you think the SHADOW INVENTORY will be released to the public?
builder sentiment down, home building up??
economy green shoots, unemployment up??
investor,firt time buyers, chinese snaching/bidding on homes, forclosure wave gets bigger, mutliple waves coming
SOMTHING HAS TO CRACK! WHEN? 2012, OR SLOW …through 2022?
June 17th, 2009 at 9:05 pm
deflation or stagflation?
June 18th, 2009 at 8:01 am
ex_owner, for selfish reason, I hope you’re right about price falling to 1998, although I doubt it.
Oh and let me add something to your historical price list:
350K in 2000
430K in 2003
640K in 2006 goog enough for ex_owner
430K in 2009 good enough for Dave The Renter, but ex_owner thinks Dave’s an idiot
???K in 2012 NOBODY KNOWS!!!
June 19th, 2009 at 12:53 pm
“???K in 2012 NOBODY KNOWS!!!”
Exactly. And that’s why people should be very cautious. I’m sure there bargains out there, but in uncharted waters that RE presently resides, sharks and other predators are everywhere.
June 19th, 2009 at 5:40 pm
fool me once shame on you.. fool me twice..can’t fool me again!
June 20th, 2009 at 1:51 pm
Mark,
Is it possible to estimate the current “shadow inventory” ? Thanks
June 20th, 2009 at 5:02 pm
This is starting to look like a “Land Grab”
I have been making offers for about 6 months.
Houses are sold from TARP banks without being listed.
Example: Listed 9:00 am active Pending 9:01 am same day
I wrote to Wachovia and they answered me saying they fired
this Realtor.
Now its going on at JP Morgan, which I have also written to.
The houses I tracked back are being sold to wealthy investors, and real estate investment groups.
I wrote to Obama, Pelosi (my rep) and Frank and got no response.
latest today “Short Sale, 24 hour notice call agent before showing.
No more offers, pending.
less than 24 hours.
We paid for the bailout and we can’t buy these homes.
June 20th, 2009 at 5:05 pm
JC the shadow inventory are the homes the banks are postponing at auction.
Friday:
37 to be auctioned
33 postponed
they are sitting in the shadow inventory, not paying property taxes, or mortgage. Some up to 2 years.
June 21st, 2009 at 12:44 am
Kim, thanks for the update. Keep us inform if you find out anything new. Something is going on, the big boys are playing games and we, the little guys, get screwed every time. I went to see house today. I actually called the listing agent yesterday when it was listed for one only day, and was told it got over 60 offers. WTF!! True, the agent could have lied, but multiple 30-40 offers is no longer unusual. Yet, our government is trying to prevent foreclosures from coming on the market.
June 21st, 2009 at 7:06 am
Wonton, you and many others.. are sure playing their game.. patience required, in order to win! Their “damage control” and “perception game” will soon loose, if you stop bidding on ONE (0f many) home(s) that’s released.. there are (much, much) more in the pipe.. more than you can imagine.. and more coming… do you want THE bottom in 2012 or 2022?
June 21st, 2009 at 7:08 am
USE SOME COMMON SENSE!
June 21st, 2009 at 7:13 am
I’m going to guess shadow inventory in Cali is at 200,000 homes, am I good Mark?
June 21st, 2009 at 7:27 am
Wonton, let me add something too:
430K in 2009 good enough for Dave The Renter, but Wonton..is having doubts (should I trust ex_owner, who already experienced the loss, the nighmares, is getting his common sense back?.. or am I missing out??)
WONTON.. GO BUY! please! I like nothing better to see than you “living” in a house.. that depreciates for 12 years!
June 21st, 2009 at 10:45 pm
ex_owner, your posts are silly and they don’t make sense.
June 22nd, 2009 at 9:46 am
as far as i can tell, the shadow inventory has two parts: the REO properties that are not being listed and the NTS properties that are having their auctions postponed.
from attachment E of the sac city/county 2009 Foreclosure Action Plan: http://www.shra.org/Content/Housing/Foreclosure/HCD/ExhibitE.pdf
“Estimates of Numbers of Properties Remaining in REO Vary – It is
unfortunately difficult to pin down the number of properties that remain in REO status at any point in time. Information from DataQuick Information Systems estimates that the number of unsold REO properties in Sacramento County increased from about 4,400 in August 2007 to over 14,000 in July 2008. However, information received from the Sacramento Association of Realtors(SAR) indicates that they were tracking only about
2,100 REO properties for sale in mid-August 2008.”
so, that 12k properties in the shadow inventory in july 2008. looking at the 3rd quarter Foreclosure Tracking Report (FTR)
we add 2/3(4720) for august and september and 3167 from the 4th quarter FTR and 2819 from the 1st quarter 2009 FTR for a total or 14000+3000+3167+2819 = 22986 REO properties in the sacramento region.
now we have to get at how many REO properties sold since august 2008. i will post again when i figure that out.
and dont forget, this does not count the NTS that are currently being postponed at a rate of 73% (what report did i get that from, anybody?)
June 22nd, 2009 at 9:48 am
sorry, link to quarterly reports:
http://www.shra.org/Content/Housing/Foreclosure/ForeclosureRpts.htm
June 23rd, 2009 at 8:26 am
I am one one town, watching the foreclosure radar everyday.
36 set to auction
30 postponed
June 23rd, 2009 at 11:39 am
Thanks Kim. Do you know what the reason is for these postponed props?
June 23rd, 2009 at 3:50 pm
Wonton, so the prices don’t get lowered (too many homes at auction.. let people bid up the few that are available at auction)… or maybe they don’t want to take the loss this quarter.. they’ll take it next quarter.. you like my thinking? or still silly to you?
PATIENCE GREEN HOPPER
June 23rd, 2009 at 6:00 pm
yes ex_owner, your posts are still silly.
You can talk all you want but we know what you’re about, don’t we?
You bought at the peak and lost your home. So what do you do? You blame others for your mistake or at least you want others to share the blame for your decision. Even so, you are still infatuate with owning a home but you CAN’T buy. So you attack anyone even thinking of buying, because they have something that you don’t, A Choice.
Look, price is important but there is more to a value of a home than just price. Which is better, to buy a home now for $400,000 if you can afford it or to buy the same home for MAYBE $350,000 three years from now? That’s three years of your life that you can never get back, how much is that worth? Each one of us has to answer that for ourselves, and it’s not up to you for determine the answer for other people.
June 23rd, 2009 at 7:51 pm
Wonton, stop blogging..and go buy one! I think you’re talking in reference to someone that could buy now..not me personally..I’m still in jail credit remember?
I’ll continue to save, and learn(ed/ing) from my mistakes!
Life it’s not only about buying a home, you know? my time will come again sometime in the future..it’s just funny to see you and other being manipulated by the many “bids” on a home, and trying to understand what’s going on… you still won’t.. and will not until you go through it.. good luck my friend..now go and help the economy!
June 23rd, 2009 at 8:05 pm
“Which is better, to buy a home now for $400,000 if you can afford it or to buy the same home for MAYBE $350,000 three years from now? That’s three years of your life that you can never get back, how much is that worth?”
$100,000
On your price of $350,000.. saving 50,000 over life of the loan.. 100,000 .. seems a lot of money to me… conidering I’m still next to my kids, still working, roof over my head, and saving
Now think on $200,000 (my believe that prices could go to 1998)
200,000.. saving 200,000 with interest over life of the loan.. 400,000
HMM? and add to that a nice 20% down payment(RATHER THAN A FHA LOAN).. 260,000 over life of the loan.. 520,000! GEEEEEEEEEEEE now we’re talking some SAVINGS!
June 23rd, 2009 at 8:12 pm
so stop saying it’s a place to live..it’s so important.. put your money where your mouth is.. go buy!
Ninja loans are back! right?
unemployment non existant! right?
people are paying their mortgages! right?
securitization is back!
underwater owners..their balance is wipped off
ex-owners can get a home a again!
EVERYTHING IS ROSY! keep smoking the pipe and buy a home to live in (for couple years..than you can blame me.. cause I said buy!)
June 23rd, 2009 at 8:16 pm
THIS MARKET IS DEAD FOR YEARS!!!!!!!!!!!!! ENGINEERED BY THE BANKERS!! SO THEY CAN BUY LOW, AND GET MORE $$$$$$$ LATER…RINSE AND REPEAT!!!
EVEN IF THEY WANT HYPER INFLATION.. IT WON’T WORK.. WE THE PEOPLE WON’T STAND FOR IT AGAIN! STOP THE BAILOUTS!!! LET THE MARKETS GO BACK TO NORMAL (i say 1998, but remember many place are already at 1988 prices..or lower..IT WILL OVERSHOOT… have you checked DETROIT? I can go buy 8 homes right now for CASH!)
June 23rd, 2009 at 8:20 pm
WELCOME TO THE GREATER DEPRESSION! (some see it early..some will see it later)
June 24th, 2009 at 12:36 pm
I finally figured out what ex-owner-now-renter is. he’s fortuneteller!! he can forecast the future! Oh great one, when is it a perfect time to buy. Since you made such a wise decision before, all your future decisions MUST be as wise too!
June 24th, 2009 at 1:00 pm
Banks delaying foreclosure because they don’t want to pay property tax. It is destroying neighborhoods, the former owners have long since moved out. They also don’t have to evict when they want the house. The banks are trying to force a bottom and keep inventory low.
This will go on for years, don’t expect to buy and see any appreciation for years.
June 24th, 2009 at 1:03 pm
NewHomeOwner, you got it! and I’m a better one than Wonton! I’ll stick with my savings and DEFLATION call.. now go buy a washer, dryer, a car.. go STIMULATE!
btw did you buy a new home? or just new to owning?
..AND, if it’s such a good time now.. why are there INCENTIVES to buy?
8 K, low interest, gov worry about deflation… CAN YOU EXPLAIN THAT WISE ONE??
June 24th, 2009 at 9:48 pm
MM,
What’s up? when is the next article coming? it’s been 10 days!
Maybe you can write one on the “shadow inventory”…
June 25th, 2009 at 10:41 am
Mark, are we on track or are you surprise at the lack of foreclosures that we’re seeing up to date?
June 29th, 2009 at 12:00 am
If what Kim says is true, that banks are delaying foreclosure on vacant properties and not paying property taxes, how long until people start talking about using the adverse posession law to pick up properties for free (or the price of property taxes)? That’s pretty much exactly what the law exists for — to make sure that land remains reasonably well utilized.
Anyway, that would sure force banks to foreclose in a hurry.
June 29th, 2009 at 8:23 am
I watch one town only, with very high default rate.
Friday:
36 set for auction
33 delayed
3 sold to bank
Listed by banks 4
went contingent 11
forcing a bottom.
Foreclosed and held back for one year, bank won’t respond to my offer to purchase.
Was Countrywide, owner listed as Bank of New York Mellon
Loans on property 648K
Bank of Mellon purchased for 236K
Where did the other money go?
lots of shady stuff going on.
June 29th, 2009 at 8:55 am
“Loans on property 648K
Bank of Mellon purchased for 236K
Where did the other money go?”
The money didn’t go ANYWHERE because it wasn’t THERE in the first place. Poof!
June 29th, 2009 at 10:26 am
I have a good friend who has not paid his mort. in over 8 months and has heard very little from the lender.
A family on our block did a couple refi’s a few years back and purchased outright to new cars both BMW’s, and some pretty nice toys etc… we thought at the time they were just doing good. I just learned they have not made a payment since last year and have been living rent fee.
A third family just moved out, said the bank would not call them back so F-um they rent around the corner.
I wonder how many more in Mission Viejo are in the same boat.
June 29th, 2009 at 1:31 pm
Why is Mr Mortgage “missing in action”?
June 30th, 2009 at 9:29 am
Mark,
Please keep doing what you are doing! There are an awful lot of bottom callers out there – and they are people who should know better!
July 1st, 2009 at 3:40 pm
So, are you on vacation or is someone paying you some hush money?
I would be interested in your thoughts on these quotes:
“In better times, lenders tended to begin the foreclosure process after three months, said Guy Cecala, publisher of Inside Mortgage Finance. Now it is not unusual for it to take nine months for the process to begin, he said.
‘No one is in a rush, lender-wise, to deal with the property,’ he said. ‘If you have to sell at a loss, why rush?’
Lenders traditionally write down the value of the home six months after an owner stops making payments, but the total loss is not recorded until the property is sold in foreclosure, said Mark Zandi, chief economist of Moody’s Economy.com.”
“It used to be that they wanted to foreclose as quickly as possible. . . . [Now] it’s like this hot potato that nobody wants.”
More than ever, foreclosure has become an unattractive outcome for lenders.
“What we’re seeing more and more right now are cases of a lender threatening foreclosure and the foreclosure sale is canceled at the last minute,” said Jeanne Hovenden, a Richmond bankruptcy attorney, . . . . “It’s more like the lenders don’t want to own any more real estate and are using foreclosures as a pressure tactic.”
quotes from:
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/23/AR2009062303500_pf.html
What percentage do lenders now write down values after six months?
Has this percentage changed since the FASB changed its mark to market rules?
In other words, are the banks writing off very little until they actually foreclose?
Are the banks delaying foreclosures to avoid taking write downs and having to meet increased capital requirements (knowing that they have upcoming problems with commercial real estate and credit card defaults)?
I would really like to hear your thoughts.
Thanks.
July 4th, 2009 at 5:54 am
People, there is just so much going on regarding the foreclosures, that you just don’t get. For example:
Kim, not to pick on you, but the property tax excuse is not valid. The reason is that property taxes represent maybe two months of payments. No big deal. Andy why do I say that?
Simple, the Pooling and Servicing Agreements for the Securitized loans require that the Master Servicer make “advances” to the investors of each any every payment missed by the borrower. With most PSA’s, that must occur each and every month until the loan is either brought back to performing status or the home is foreclosed on, at which time they can get back their advanced payments. So foreclosure would make the most sense, but the Master Servicer is not foreclosing immediately. Why not?
Because the TARP money goes to the Master Servicer, so that the Master Servicer is reimbursed the advances, so that they do not go out of business due the the advances destroying liquidity.
This means that the Master Serrvicer can foreclosure at their leisure, keeping REO’s “low”, also trying to do workouts, and su much more.
Follow the money……
As to those who complain about Mark not posting more often, he has a real jjob, that requires real work. He just can’t stop and write articles to please people. He must make money also.
July 24th, 2009 at 6:53 am
A lot of usefull financial info.
July 24th, 2009 at 10:21 pm
Haha – you don’t see posts like this too often
July 26th, 2009 at 11:32 am
I talked to a real eztate analyst from CA last year who was predicting a 70% peak to trough drop on CA property , based on then currently available data. Anyone care to comment . It will be the same in Dubai already at 50%.
July 27th, 2009 at 9:42 am
Thanks for the news, I really didn
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