Lenders hope they can solve all their problems by making the housing market hit bottom. If prices bottom, people who bought at the bottom gain equity with rising prices, and they in turn reignite the move-up market which will allow the banks to sell their high-end shadow inventory. 
Further, rising prices makes for fewer short sales and fewer foreclosures and distressed sellers become equity sales. Rising prices would be a panacea for lenders, which is why the full weight of our government and the federal reserve is working to make house prices go back up. They tried and failed to create a bottom in 2009. They hoped they had created momentum with tax credits in 2010. They failed.
Lenders and the federal reserve are at it again. Mortgage interest rates are now down to 3.75%, and lenders are withholding inventory from the MLS to prevent further price declines. Again they hope they can create an artificial bottom and momentum to carry them through the liquidation of their distressed inventory. This time around, interest rates are lower, and the economy is better; however, they are still faced with a huge overhead supply that will take years to sell off.
If lenders are successful in engineering a bottom and creating momentum, they will all celebrate their success, but then they will return to the dirty business of selling distressed inventory and recycling the millions of bubble-era loans. Loan modification programs are a proven failure with redefault rates at 50% within a year of initiation, so these houses will eventually have to be sold to new borrowers with income capable of sustaining ownership. Even if prices begin to rebound, many sellers will sell when they get back to breakeven because they can’t afford their payments over the long term without HELOC supplementation. There is no way to avoid millions of distressed sales.
Foreclosures Show No Sign of Decline
By NICK TIMIRAOS — Updated May 16, 2012, 7:57 p.m. ET
At the end of March, 11.8% of all loans were at least 30 days past due or in foreclosure, the report from the Mortgage Bankers Association said. While that is still high by historical standards, it has improved steadily over the past two years, falling from 12.8% a year ago and 14.7% two years ago.
The decline in the share of homeowners late on payments was due almost entirely to fewer new cases of delinquency, a sign that households’ finances are improving. The percentage of borrowers behind on their mortgage but not in foreclosure fell to 7.4% at the end of March from 8.3% a year earlier.
“The drops we continue to see there are the best news out of this. It indicates the speed with which we’re working through the backlog” of bad loans, said Jay Brinkmann, chief economist of the Mortgage Bankers Association. The survey covers about 88% of all U.S. mortgages, or about 43 million loans.
The drop in the delinquency rate does not reflect the speed at which lenders are processing the backlog. Many of these loans were modified which means they will redefault again later. Even at their 0.9% annual rate of decline in delinquency, it will take another three or four years to get back to historic norms. It will take longer than that to process the resulting foreclosures and eliminate the inventory.
Several nonjudicial states that had severe housing problems, such as California and Arizona, have seen foreclosure rates drop below the national average. While there are signs that home prices are beginning to rise in more markets, including hard-hit Phoenix and Miami, those communities with a large “shadow” inventory of potential foreclosures could face renewed price pressure once banks take back and list for sale more of those properties.
In those states, investors have grown more confident that more foreclosures won’t be dumped on the market, said Mr. Brinkmann. There, “the market is stabilizing and people are coming back. …”
Withholding inventory doesn’t make it go away. 8.7 years from now when delinquency and foreclosure rates drop back to historic norms because we are finished processing all the distressed inventory, then I won’t worry about the impact of shadow inventory. Until then, caution is warranted.
Zero down Ponzis yet to be processed
There are still tens of thousands of bad loans to be processed in Orange County. Far too many borrowers were like the former Ponzis behind today’s featured foreclosure. They put no money down, took the free money offered to them, and when the ATM machine shut down, they stopped paying and waited for the bank to boot them out.
- This property was purchased on 10/18/2002 for $275,000. The owners used a $220,000 first mortgage, a $55,000 second mortgage, and a $0 down payment.
- On 8/31/2004 they refinanced with a $340,000 first mortgage.
- On 3/11/2005 they obtained a $83,000 HELOC.
- On 7/25/2009 they refinanced with a $444,000 first mortgage.
- On 3/27/2007 they refinanced with a $484,000 first mortgage and a $20,000 stand-alone second.
- The defaulted sometime in 2009 and were kicked to the curb in March of 2011.
If housing hadn’t busted, they would still be increasing their mortgage and spending free money. HELOC abuse was a pattern with them. It’s cases like these that make me feel foolish renting during this time. While I was paying my rent, this house was paying these Ponzis $221,000.
Anaheim Overview
Median home price is $309,000. Based on a rental parity value of $457,000, this market is under valued.
Monthly payment affordability has been improving over the last 2 month(s). Momentum suggests unchanging affordability.
Resale prices on a $/SF basis increased to $214/SF to $217/SF.
Resale prices have been weak for 12 month(s). Price momentum suggests weak prices over the next three months.
Median rental rates increased $33 last month from $$1,883 to $$1,916.
Rents have been slowly rising for 12 month(s). Price momentum suggests slowly rising rents over the next three months.
Market rating = 8
Proprietary OC Housing News home purchase analysis 
2945 West SKYWOOD Cir Anaheim, CA 92804
$302,385 …….. Asking Price
$275,000 ………. Purchase Price
10/18/2002 ………. Purchase Date
$27,385 ………. Gross Gain (Loss)
($22,000) ………… Commissions and Costs at 8%
============================================
$5,385 ………. Net Gain (Loss)
============================================
10.0% ………. Gross Percent Change
2.0% ………. Net Percent Change
1.0% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$302,385 …….. Asking Price
$10,583 ………… 3.5% Down FHA Financing
3.78% …………. Mortgage Interest Rate
30 ……………… Number of Years
$291,802 …….. Mortgage
$77,341 ………. Income Requirement
$1,356 ………… Monthly Mortgage Payment
$262 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$76 ………… Homeowners Insurance at 0.3%
$304 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$1,998 ………. Monthly Cash Outlays
($207) ………. Tax Savings
($437) ………. Equity Hidden in Payment
$13 ………….. Lost Income to Down Payment
$96 ………….. Maintenance and Replacement Reserves
============================================
$1,463 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$4,524 ………… Furnishing and Move In at 1% + $1,500
$4,524 ………… Closing Costs at 1% + $1,500
$2,918 ………… Interest Points
$10,583 ………… Down Payment
============================================
$22,549 ………. Total Cash Costs
$22,400 ………. Emergency Cash Reserves
============================================
$44,949 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..
We're sorry, but we couldn't find MLS # P821267 in our database. This property may be a new listing or possibly taken off the market. Please check back again.
 |
$335,900 3034 West ROME |
0.54 miles 3 bd / 2.5 ba 1,486 Sq. Ft. |
|
 |
$259,000 3130 West POLK Ave |
0.62 miles 3 bd / 1 ba 987 Sq. Ft. |
|
 |
$535,000 2902 East BALL Rd #2 |
0.72 miles 3 bd / 2.5 ba 1,152 Sq. Ft. |
|
 |
$320,000 8625 South KENDOR Dr |
0.74 miles 3 bd / 1.75 ba 1,178 Sq. Ft. |
|
 |
$349,000 3160 West TERANIMAR Dr |
0.8 miles 3 bd / 2 ba 1,437 Sq. Ft. |
|
 |
$349,000 2816 RAVENSWOOD |
0.86 miles 3 bd / 1.75 ba 1,468 Sq. Ft. |
|
 |
$449,000 10151 Dale Ave |
0.89 miles 3 bd / 2 ba 1,393 Sq. Ft. |
|
 |
$339,000 3308 W Faircrest Dr |
0.93 miles 3 bd / 2 ba 1,292 Sq. Ft. |
|
 |
$280,000 10272 DALE Ave |
1.04 miles 3 bd / 1 ba 987 Sq. Ft. |
|
 |
$284,900 7304 WILSON Cir |
1.1 miles 3 bd / 2 ba 1,108 Sq. Ft. |
Sign up for the OC Housing News monthly market newsletter.
See the enormous foreclosure pipeline for yourself below. Enter location and press search. Scroll through list by pressing "next."
17 Responses to “11.8% of all loans at least 30 days past due or in foreclosure”
Sorry, the comment form is closed at this time.
Speculators abound…
Even more-so than in the early to mid 2000′s, I’ve never come across so many individuals from PE groups and small-fry soloists currently engaged in the OC RE sandbox who think prices are going to take incremental ”big jumps up” going forward. It’s nutso, the size of the herd.
Problem is, they’re all positioned on the same side of the boat and volatility is going to go sky-high.
As Economy Improves, Prices to Hit Bottom in 2013 After Dropping: Fitch
Fitch Ratings released a report projecting another 7.8 percent drop in U.S. home prices before the market reaches sustainability, according to the rating agency’s fourth quarter sustainable home price (SHP) report. This is a decrease from last quarter’s prediction of a 9.1 percent drop.
As long as economic growth is steady and inflation runs close to 3 percent annually, Fitch believes home prices will finally hit bottom in late 2013, and then move towards a slow recovery.
Fitch cited factors such as high unemployment, a declining labor force, stagnant wages, and a large delinquent inventory as factors hindering recovery.
For states such as Nevada and Michigan, which are 65 percent and 48 percent below their peaks, respectively, prices are falling more steeply than the national average. Though, a careful examination of Michigan reveals the state might be stabilizing. Fitch reported that prices over the last year are down less than 1 percent, and Detroit has seen prices rise by more than 8 percent in the last six months.
New York and New Jersey, known for their long liquidation timelines, are seeing price declines. New York has seen a 2.7 percent decrease in a year, despite having a strong metropolitan such as New York. In New Jersey, prices are down by more than 7 percent over a year.
According to data from Fitch, plains states are seeing price increases while their economies remain strong. Year-over-year, prices in North Dakota increased 1.7 percent, while in Nebraska, prices increased by 1.1 percent.
Home prices in North Dakota are back to their peak level, while South Dakota is just 7 percent below its peak. Also, Alaska is just 6 percent below its peak, Texas and Oklahoma are 8 percent, and Iowa 10 percent.
Prices in Arizona moved upward slightly, which may signal a start towards recovery.
While prices in Arizona are about 59 percent below their peak, the worst seems to be over for the state, which ranked in the bottom half for the volume of its distressed inventory.
In the early 30′s, they didn’t know it was the ‘great depression’ yet.
.
”Happy Feet” –Rick Santelli
http://www.ftense.com/2012/05/rick-santelli-discusses-greecifornia.html
Great Video … thanks
So, the producers are leaving the state, taking their taxable income and taking their votes. Hmmmm … so we get more people working for the state or receiving retirement from the state or receiving assistance from the state … I wonder who they vote for? Oh … that’s how Brown became gov … AGAIN!?!
Week After Week, Rates Continue to Break Record-Low Numbers
Just when it seemed like they could not fall any further, fixed-rate mortgages continued to drop, breaking record-low numbers once again, according to Freddie Mac’s weekly mortgage market survey.
“The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields and fixed mortgage rates to ease for another week,” said Frank Nothaft, VP and chief economist for Freddie Mac.
The 30-year fixed-rate mortgage averaged 3.79 percent (0.7 point) for the week ending May 17, slipping from last week’s average of 3.83 percent. Last year at this time, the 30-year rate was 4.61 percent.
The 15-year fixed-rate mortgage ended the week at 3.04 percent (0.7 point), dropping from 3.05 percent last week. Last year at this time, the 15-year averaged 3.80 percent.
The 5-year ARM rose to 2.83 percent (0.6 point) from last week’s average of 2.81 percent. A year ago, the 5-year ARM averaged 3.48 percent.
The 1-year ARM also moved up, averaging 2.78 percent (0.5 point) this week compared to last week’s average of 2.73 percent. Last year at this time, the 1-year ARM averaged 3.15 percent.
Bankrate.com, which releases a weekly survey using data provided by the top 10 banks and thrifts in the top 10 markets, reported a record-low average for the 30-year fixed, which dropped below 4 percent.
The 30-year averaged 3.97 percent, down from 4.02 percent last week, while the 15-year rate remained unchanged from last week at 3.20 percent.
The 5-year ARM moved up slightly to 3 percent; last week, it averaged 2.99 percent.
These extremely low rates are the only explanation for the new homes being sold. They’re pouring the foundations on the final two townhouse rows in the Mirabella development in Columbus Square. 1,700 – 2,200 sq foot townhomes starting from $430s to $520s. They’ve been selling well, with the end-units sold-out. The smallest interior units would likely rent for $2,700+.
Low rates and lack of MLS supply is going to make homebuilders very happy, at least until the banks start releasing their REOs again.
The fed can’t defend below market rates and USD simutaneously. Indeed, there is an operational grey area but the spread is minimal.
Just keep your eyes on gold for the signal. If it breaks out to around $1800, the fed will be forced to shift modus from predominately defending ultra low rates to defending USD. That’s when rates will begin to rise.
I think the fed will allow inflation for a while. I think they believe they have no choice but to support house prices even if it means a bout of rapid inflation.
I expect to see sales volumes drop off significantly in the next few months due to the lack of inventory.
The big story will be the sharp increase in new home sales. This will be inaccurately touted as a sign of a general housing recovery. The reality is the increase in new home sales will be a direct result of the lack of MLS inventory.
Southern California Home Sales Figures Rise
According to numbers released by DataQuick, last month’s home sales numbers in Southern California experienced a modest climb from last year.
Median home sales prices in Southland rose year-over-year in April for the first time in 16 months. The median price paid for a home in Southland was $290,000 this year, up from $280,000 in March 2012 and April 2011. This increase is attributed to gains in the region’s coastal counties, where home sales made up 71.5 percent of the area’s total, an increase from last year’s 68 percent.
Also cited as cause for this year’s higher numbers is the fact that foreclosed and discounted properties made up a smaller portion of sales.
While April’s $290,000 median still sits far below the high point of this real estate cycle-$505,000 in mid-2007-DataQuick president John Walsh said that the climbing numbers could be a good sign.
“The housing market continued its painfully slow crawl back toward normalcy last month,” Walsh said. “You can see it in the fading role of foreclosures, the uptick in median prices here and there, and the higher levels of sales in coastal counties.”
He warned, however, that there are many other factors to consider when looking at Southland’s real estate numbers.
“Of course, there are still a lot of things that make this market abnormal,” he said. “Investor and cash buying are still unusually robust. The jumbo loan market has yet to recover, and the use of plain-vanilla adjustable rate mortgages, or ‘ARMs,’ remains far below normal.”
ARMs made up 7.1 percent of April’s Southland home purchase loans, down from 8.5 percent a year earlier. Since 2000, ARMs made up a monthly average of about 36 percent of purchase loans.
In contrast to recent trends, the number of low-cost homes sold in Southland fell due to the decreased number of foreclosures being sold and the shrinking inventory of homes for sale. The number of homes sold in April for less than $200,000 was 4.7 percent lower than last year’s number while sales between $200,000 and $400,000 rose 5.5 percent.
Distressed sales, a combination of foreclosure resales and short sales, made up about 47 percent of April’s resale market-the lowest percentage since April 2008. Foreclosure resales accounted for 28.6 percent of distressed sales while short sales made up 18.4 percent.
Investor activity held near a record-high level, and the number of cash buyers remained at double the historical average. Cash purchases made up 31.5 percent of April home sales, just under last year’s 31.8 percent. Cash buyers paid a median of $225,000, $15,000 more than a year ago.
Absentee purchases made up 27.8 percent of Southland’s sales last month, an increase from 25.4 percent in April 2011. Absentee buying was greatest in the Inland Empire, where it represented 35.8 percent of all homes sold in April.
Last month’s typical mortgage payment for Southland buyers was $1096, down from last year and 62 percent less than the current real estate cycle’s peak in July 2007.
While foreclosure activity is high by historical standards, it has dropped greatly from its peak in recent years. DataQuick reported that financing with multiple mortgages is very low, and down payment sizes are stable.
Jobs numbers are out for California and they are grim. Housing can only go down with these numbers.
California employers trimmed their April payrolls by 4,200 jobs last month, snapping a string of eight straight months of employment growth.
http://www.latimes.com/business/money/la-fi-mo-april-unemployment-rate-20120518,0,2941132.story
Yep. No jobs means no new household formation which means no buyers for the banks REO. Of course, they could continue to hold this stuff for another decade or two, which seems to be their plan right now.
IR,
“No jobs means no new household formation which means no buyers …” If that were true, there would be no octo-moms.
Remember the quickest path to PC sainthood is being a single mother.
What are the rates on non-preforming mortagnes in Irvine?
Since squatters are likely to have more than one loan, what is the percentage of houses occupied by squatters?
Being interested in Irvine, what is the percentage of non-paying loan owners in Irvine?
How’s the HOA collection? What are the percentage of non-payers?
I wish I had good data on that. I do know that HOA delinquencies are much higher than reported mortgage delinquencies which implies the mortgage delinquency numbers are greatly under-reported. Irvine is loaded with shadow inventory, and the beach communities are even worse.
Unless my master HOA and sub HOA are both lying, reserves are above projections. My sub HOA dues went down a few dollars this year due to this. My development started being built in 2006, so it is a prime candidate for foreclosures/short sales (we’ve had a good share) and HOA dues deficiencies (none so far).
Some of the new SFH allowed purchases only with 10% or 20% down and contracts that did not allow HELOC withdrawing. Smart move. Makes FC easier for the bank if there’s equality to cover the loan and the loan owner feels like there is something to lose by squatting.
Another has 2 years pre-paid HOA (condo) built into the purchase price. Unfortuantly for this development, there are lots of unsold units.