(Correction: Explanation of bad-loan categories changed.)
First the good news: The ratio of foreclosed properties in Orange County on the books of banks dipped to 0.5% of all home loans in the county in May, from 0.8% in both April ‘09 and May ‘08, according to First American CoreLogic.
Such data may mean bank-owned properties are selling, especially houses under $500,000 or so.
Now the bad news: The rate of properties in the foreclosure pipeline, meaning a notice of default has been filed but the auction has not been held, increased to 2.1% in May, from 1.3% in April and 1.5% in May ‘08.
It doesn’t end there.
The ratio of mortgages at least 90 days late jumped to 6.3% in May, from 4.6% in April and 4% a year ago. The month-to-month increase works out to a 37% jump in the rate. (Correction: Based upon what a First American rep told me, I initially wrote that the 90-day and foreclosure-pipeline categories did not overlap. But the economist who compiles the data told me on 8/3/09 that “90-day” includes all loans at least three months past due, including those with a foreclosure filing.)
It is possible that many of those people in delinquency will get a loan modification and avoid foreclosure. But so far data show loan mods work less than half the time.
And note the county’s unemployment rate climbed to 8.6% in May, and typically foreclosures rise along with unemployment.
More from this blog…
- Mortgage fraud is ‘rampant’
- Delinquencies on home-equity loans, credit cards hit records
- Loan servicers prefer big losses to loan forgiveness
- Profiting from an Irvine bank failure
- Buying an investment property? Some loan tips…
- Mortgage rates plummet
- These O.C. homes are about to be foreclosed
- O.C. mortgage delinquency jumps again
- 125% refinances allowed on troubled mortgages
- Distressed housing inventory down 46% since December
- Banks offered 61% off these foreclosures
I’m sure some homeowners have been caught in this mess through no fault of their own and didn’t game the system, but it sure must be nice to live house payment free for 3,6, 9 or even 12+ months.
Tempting…..
It may or may not be their fault, but it’s their problem… and the problem is, too many of them want the rest of us to take care of their problem.
No rebound in home prices is coming…with lending standards requiring 20% down and steady high paying jobs leaving there is no valid reason for optimism that prices will stabilize. All the factors point further downward, for those who once had some equity or are upsidedown this is tough but for the young who are lucky enough to find jobs it might mean they can afford a home.
Only now you’d have to put 20% down WS as opposed to many of these people who had no skin in the game.
Good points Matt. Reinforces that a lot of foreclosures and “shadow inventory” is out there. Prices will drop later this year.
Unless something is done to slow unnecessary foreclosures we are going to be hearing of the increasing backlog of foreclosed homes for a long time to come. The current number of foreclosed properties for sale does not even represent the 70% shadow market of unlisted properties. Values are dropping at a rate of 2% per month. Every time a house is foreclosed in your neighborhood it is estimated every property in that area devalues by approximately $7200. There will be a bottom, but at a devastating cost to every home owner, even those making their payments on time.
David,
What are you talking about “unnecessary foreclosures?”
A foreclosure is required by the Bank/owner of the property if the person paying the mortgage does not pay.
Please explain “foreclosure” versus “unnecessary foreclosure”
SG
What needs to be done with foreclosure is stop the moratoriums, for banks to speed up the process, foreclose and take properties back, drop the prices and sell them off. No way to avoid prices falling. Let’s just speed it up and get on with it so we don’t drag this down cycle on for a decade.
“No way to avoid prices falling.”
Home Prices Post First Quarterly Gain Since 2006
http://www.housingwire.com/2009/07/09/home-prices-post-first-quarterly-gain-since-2006/
The article from housing wire represents the nation. Here on the West we are looking at a loss of:
-0.7% for the month, 6mo/6mo -11.25%, and yr/yr -22.5%.
Our politicians are doing a good job of keeping the markets calm by using the media to tell the average person that the “worst is over” and “the economy is recovering.” Unfortunately, these optimistic messages are not supported by the actual data.
Bottom line, the market data still indicates that property values will have another drop in value. This will occur when the lenders finally start foreclosing on non-performing loans.
A flood of foreclosures are still due to hit us, and continued unemployment will continue to add to the number. By some accounts, more than 10% of all residential loans in California are more than 90 days delinquent – but most are not yet in foreclosure.
Under old banking standards, a bank was required to report a non-performing asset – for example, a home loan that stopped paying and was more than 90-days late. Today, however, many banks are just sitting on non-performing assets because the government is allowing them to hide the loss by postponing foreclosure. Again, this does not solve the crisis, it just POSTPONES the inevitability of having to release these non-performing assets.
The public really doesn’t know how bad the delinquencies are, and many “sources” are quick to report to the media that “the worst is over.” Unfortunately, we KNOW that there are thousands of foreclosures being artificially held back. Worse, recent unemployment figures and high credit card delinquencies are suggesting that even more homeowners will soon be underwater on their home loans.
When these foreclosures hit, any recent small gains on home prices will be lost and home prices will fall.
In the first quarter of 2009, there were over 24,000 Notice of Defaults filed in the Inland Empire alone. Where are all the foreclosures??
I have to go to the bathroom, but I’m going to hold it. Later, I really have to go, but I’m holding it… I’m really really have to go, but damn it, I’m holding it…. you don’t understand, I have to, I must, I gotta gooo, but I’m holding it all in. You all know what’s coming, don’t you?
What do think will happen when that day comes? You better stand back, wayyy back… This is what banks are doing with foreclosures and we all know that day come sooner or later. How’s that for visuals?
Not only did you piss your pants, hard, but you now have a bladder infection.
Got antibiotics?
When I said “have to go to the bathroom”, I wasn’t referring to “number 1″. Ohh forget it.
I know many people including myself who have gone 6+ months without paying and still not received an NOD. I talked with the bank recently about being in foreclosure and they informed me I wasn’t actually in foreclosure yet. I should have lost my place last month. I’m not bragging about this as I actually find it quite disturbing. I know many others in this situation and I think people have a right to know to what degree the banks are holding this stuff back.
I know someone who hasn’t paid his mortgage for about a year. He is currently still living in the house. This is how bad it has gotten. The banks don’t even want the house back.
I have not paid my mortgage in 9 months - called the bank and stated I was leaving the home and what should I do - they begged me to stay and said don’t worry about the payments.
Matt, I’m pretty sure you misspoke about the 90 day lates not having NOD. The rate you posted is consistent with NODs.
That’s what First American told me.
Same for this:
“The rate of properties in the foreclosure pipeline, meaning a notice of default has been filed but the auction has not been held.”
I’m certain that should be “notice of sale has been filed…..”
I’ve seen the Loan Perfomance data and it jives with my descriptions.
Again your take is not consistent with what the company told me.
Maybe they should put in in writing? I mean, you are basically putting your reputation behind a 12% NOD + 90 day stat.
8.4% (90 day figure of 6.3% and foreclosure process figure of 2.1%) I suppose you could add in REO figure but it’s only 0.5%. Normally I would say 8.4% sounds too high, but with an unemployment rate about the same, and considering all the wacky loans during the boom, I think things are that bad now.
I will get you the chart that shows 6% in NODs (that may also include +90s). If you were right about your 2.1% in process, that would not be the case.
Give it up dealholeo, Matt knows his stuff.
Myabe I was wrong about you and you do not really understand.
Actually you probably do and will never get Matt that chart.
disclaimer- dealeo still believes in santa claus and didnt know
there was a bubble until it literally exploded in her face… now
she swears the real estate market is all well and good…
follow her advice at your own peril
Setting facts straight is giving advise? You are a sick puppy.
Dealeo, bottom line, aren’t banks holding back a lot of inventory that should have gotten a NOD and aren’t they holding back foreclosures and not releasing them on the market? There is a huge backlog, correct?
There is very little inventory on banks books (post-foreclosure) according to my research (which this story just confirmed). There is a backlog of both NTSs and NODs though. It remains to be seen what will become of them.
“The ratio of foreclosed properties in Orange County on the books of banks”
Matt or Dealeo,
Did the report contain the actual number of loans in each of these categories compared to the prior periods? I’m wondering does this include Fannie/Freddie/FHA as well as non-bank subprime/Alt-A? When they say “on the books of banks” that makes me think all of OC isn’t represented here.
What I saw was percentages only. It would stand to reason that they would hold somewhat stable regardless of investor type, as long as all product types are included.
good question, but it’s my word choice, which I now see wasn’t ideal. I used “on the books of banks” to mean not sold to investors at auction. But obviously lots of loans are part of securitizations.
My predictions:
1. Housing price in OC fall 10-20% a year for the next 5 years
2. By 2015 , you can buy a nice house in OC for $150K.
You should open fortune telling business on Beach Blvd.
In Santa Ana perhaps. You can nearly do it in Corona/Norco right now. “The OC” covers a lot of varied neighborhoods. I can’t see prices dropping to that level in HB. But, Westminster or Garden Grove??? Hmmmm.
CORRECTION: I believe Tsu meant to say:
2. By 2015 , you can buy a nice house in Stanton for $150K.
Now that’s better
Not that anyone cares, but the backlog isn’t surprising.
CA has changed CC 2924 significantly in the last year. The changes have lengthened the timeline for a non-judicial FCL in CA substantially.
The changes also are contributing to the more conservative servicers holding up their lines while digesting all the changes in law at the state and federal level. Servicers are process-driven, and the rapid pace of change to that process has some in a holding pattern until the kinks can be worked out.
But what do I know. I’m just a random commenter on a blog. I could be a cat with good typing skills, for all anyone really knows.