Banks increase foreclosures 30%, notices plummet, REO pipeline stabilizes

  25 Responses to “Banks increase foreclosures 30%, notices plummet, REO pipeline stabilizes”

1. Irvine Renter says:

   September 13, 2012 at 6:18 am

   15.1% of underwater borrowers are delinquent on their mortgages

   About 600,000 borrowers rose above negative equity in the second quarter of 2012, CoreLogic reported Wednesday.

   According to the company’s analysis, 10.8 million, or 22.3 percent, of residential properties with a mortgage remained underwater for the second quarter of 2012. The second quarter figure is a decrease from the first quarter of this year, when 11.4 million properties, or 23.7 percent, were underwater.

   Even though negative equity is said to be a driving factor for default, 84.9 percent of underwater borrowers managed to stay current on their payments.

   “The level of negative equity continues to improve with more than 1.3 million households regaining a positive equity position since the beginning of the year,” said Mark Fleming, chief economist for CoreLogic. “Surging home prices this spring and summer, lower levels of inventory, and declining REO sale shares are all contributing to the nascent housing recovery and declining negative equity.”

   While 600,000 homes moved into positive territory, 2.3 million borrowers were in a state of near-negative equity since they had less than 5 percent equity in their home. For these borrowers, the scale can tip either way, depending on the direction of home prices.

   Anand Nallathambi, president and CEO of CoreLogic, said the expectation is for home prices to continue to trend up in August.

   “Were this trend to be sustained we could see significant reductions in the number of borrowers in negative equity by next year,” added Nallathambi.

   When combining negative and near-negative equity mortgages, CoreLogic found that 27 percent of all residential properties would be in one of the categories.

   In dollar terms, the amount of negative equity decreased quarterly to $689 billion to $691 billion.

   The states with the highest percentage of underwater mortgages were Nevada (59 percent), Florida (43 percent), Arizona (40 percent), Georgia (36 percent), and Michigan (33 percent).

   Of the 10.8 million underwater mortgages, CoreLogic found that 6.6 million are without a home equity loan and the average amount in which they are underwater is $51,000. About 4.2 million underwater borrowers have first and second liens and on average, they are underwater by $84,000.

   The report also stated that homes valued at less than $200,000 had a negative equity share of 32 percent compared to 17 percent for homes valued more than $200,000.

   • Perspective says:

     September 13, 2012 at 8:00 am

     “…The states with the highest percentage of underwater mortgages were Nevada (59 percent), Florida (43 percent), Arizona (40 percent), Georgia (36 percent), and Michigan (33 percent)…”

     So are we (CA) not on these “worst” lists any longer?

     • Irvine Renter says:

       September 13, 2012 at 10:55 am

       Perhaps we are #6?
2. Irvine Renter says:

   September 13, 2012 at 6:25 am

   The trend over the fall and winter will be the bottom callers spinning negative data. It’s started already.

   Signs of cooling market: Purchase offers declined 4% in August

   The housing market is seeing signs of recovery, and this recovery may be bolstered by the new representation and warranty framework the Federal Housing Finance Agency) announced Tuesday, according to Fitch.

   Relying on signing offers and home tours as a future indicator of home sales, Redfin, a technology-driven real estate broker, predicts the market improvement seen this summer will continue into the fall.

   Offers fell 4 percent in August, while home tour requests fell 6 percent, Redfin reported Tuesday. However, these declines are smaller than declines reported in August 2011 when offers declined 13.6 percent and home tour requests decreased by 6.2 percent.

   “Housing market activity typically slows throughout the summer, yet the number of home offers in August declined much less dramatically than in 2011,” Redfin stated.
   Redfin predicts winter sales volume will outpace last year’s sales.

   “The market isn’t booming, but it’s building steadily in ways that have surprised many economists,” stated Glenn Kelman, CEO of Redfin.

   Meanwhile, Fitch takes the FHFA’s new approach to representations and warranties as a good sign, believing it “will potentially have a positive impact on both the mortgage lending and housing markets,” according to a statement released Wednesday.

   The increased focus on quality control as Fannie Mae and Freddie Mac are urged to review loans earlier in the process and the expiration of repurchase claims after loans have reached certain numbers of consecutive on-time payments will provide more certainty for lenders, thus leading to increased credit availability.

   Of course, several other issues loom overhead preventing widespread clarity in the market, including the future of the GSEs and housing reform, impacts from Basel III, and regulatory uncertainty as the Consumer Financial Protection Bureau continues to take shape, according to Fitch.

   • Bob says:

     September 13, 2012 at 7:21 am

     ‘Signs of recovery’ – as if the deflation of the housing bubble were the sickness. Seems to me a sign that most people – at least, those who participated in the bubble and the mainstream media – are either clueless or, more likely, in denial about what a financial bubble is.

     By the way, Fannie and Freddie still owe us taxpayers over $140,000,000,000, according to this database at ProPublica:

     http://projects.propublica.org/bailout/list

     • Irvine Renter says:

       September 13, 2012 at 7:24 am

       I always felt the entire deflation of the housing bubble was the recovery. The attempts to reflate it were a continuation of the sickness.
3. gary says:

   September 13, 2012 at 6:30 am

   Prices are still collapsing in the mid to upper bands. All this talk of multiple bids at these levels is pure lies. The majority of sold homes I see coming through are being sold below or at asking price which would not be the case in a bidding war. Sit back and enjoy the freedom of rented accomodation until these temporary measures cannot be maintained any longer. Housing will then find a true level.

   • Irvine Renter says:

     September 13, 2012 at 6:49 am

     Yes, the price points where there is intense competition are generally below the median. It’s difficult to find properties at all price points, but the bidding wars stop at the higher end of the range. Also, WTF priced homes don’t get bids at all.
   • Perspective says:

     September 13, 2012 at 8:06 am

     Okay, but you’re arguing others’ anecdotes are false … using your own anecdotes.

     Here are my anecdotes. I’ve followed the $750k-$1m Irvine new home developments for the past few months. It’s difficult to understand where all of these higher-earning and/or higher-wealth families are coming from to buy these expensive homes being built; but they’re here, and they’re buying. Just walk into the sales office of any one of them and ask some questions. They might have one 4 bed 4 bath $1m home available in a couple months, but the rest are sold.

     I am not arguing this is sustainable. I am solely pointing out that your discounting of “multiple bids” may not apply to Irvine in late summer 2012.

     • gary says:

       September 13, 2012 at 9:02 am

       Yes but my anecdotes are provable by looking at sold prices and listing prices. The lying realtors anecdotes are unprovable.
     • octal77 says:

       September 13, 2012 at 10:50 am

       I don’t get it either.

       True, there are (per census data) a good number of households with solid 6 figure incomes who could support WTF pricing. But those
       numbers are at best around 20% of all households.

       I don’t follow the Irvine new construction markets, but I do follow resales in some areas like Turtle Rock and Shady.

       Some TR resells turnover quickly at WTF pricing , although this summer, for example, not much came on the market.

       One property (133 Starcrest [1]) did come on the market in late July and sold almost immediately. As of a day ago, the “IN ESCROW” sign was still up on the front lawn. This sure seems like a awful long time for an escrow to close? Maybe someone could comment.

       On the other hand another property (4 Sunpeak [2]) has been on/off
       the market and all sorts of up/down/up/down price points for the last 2 years. Nice place. Just WTF priced.

       Shady is a different breed of cat. Lots of spec homes that seem to come on/off/on/off/on the market. Over the last 4-5 years prices have been trending down. Lots of realtors gaming the market in which
       MLS listings are terminated, the property re-listed under a new MLS
       at even higher WTF pricing and then pricing “cuts” made. What a scam.

       [1]

       MLS# S12093815 Single Family priced at $1,630,000*
       133 Starcrest, Irvine, CA 92603
       Bedrooms: 4
       Bathrooms: 2 1/2
       Square Footage: 2,987
       Lot Size: 7,426 Sq. Ft.
       Year Built: 1986
       **

       07/26/12 New Listing $1,620,000 CARETS

       [2]

       MLS# U12002789 Single Family priced at $2,449,000*
       4 Sunpeak, Irvine, CA 92603
       Bedrooms: 5
       Bathrooms: 4 1/2
       Square Footage: 4,850
       Lot Size: 9,000 Sq. Ft.
       Year Built: 1986
       **

       07/12/12 Price Change: -$50,000 $2,449,000 CARETS.
       07/11/12 New Listing $2,499,000 CARETS.
4. Irvine Renter says:

   September 13, 2012 at 7:18 am

   Can the middle class thrive without home ownership?

   The two presidential candidates agree that the middle class needs to be rebuilt, but no one seems to be focusing on the dramatic fall in home ownership.

   By James Sterngold

   FORTUNE — One of the few things Mitt Romney and Barack Obama seem to agree on in this acid election season is that they want to rebuild the middle class. It has long been Washington policy dogma that one of the surest gateways to securing that dream is home ownership. But that may have to change. The bursting of the housing bubble wiped out many working class families that had thrown their savings into home purchases, pushing ownership rates to the lowest level in fifteen years.

   Worse, the rate appears likely to continue dropping to levels not seen since the 1960s, in part because both parties, no matter how divided on other policies, advocate cutting government mortgage support to remove the risk of more bailouts, and possibly eliminating the mortgage interest tax deduction. That raises a thorny question: Can the government expand the middle class without more lawns to mow?

   For some, the costs from the housing meltdown outweigh the idea that the government should support this ownership bridge into the middle class, at least as much as in the past. Some characterize the old policy as having turned into a trap that stripped working families of what little savings they had and ruined their credit.

   “We destroyed the wealth of millions of households,” says David Stevens, who headed the Federal Housing Administration for the Obama administration and is now the president of the Mortgage Bankers Association, a trade group. “We over-promoted home ownership.” He says he does not believe there should be an ownership rate target but that people should just get used to entry being more restrictive.

   That is already happening. After a decades-long rise in the ownership rate, from 62.9% in 1965 to 69% in 2005, according to the US Census Bureau, it dropped to 65.5% in the second quarter of this year.

   Laurie Goodman, a senior managing director at Amherst Securities Group, says the figure should really be discounted even further; if you remove the 2.8 million borrowers who have not made a mortgage payment for over a year, meaning they are likely to lose their homes, the ownership rate is actually 63.3%, she says.

   • Perspective says:

     September 13, 2012 at 8:13 am

     “…possibly eliminating the mortgage interest tax deduction…”

     This is really surprising – that both Presidential candidates are officially advocating changing the MID. Obama wants to limit all itemized deductions to the 28% rate. He appears to support eliminating it for second homes and limiting it to the first $500k of mortgage debt. Romney wants to eliminate “all” deductions and lower rates.

     There will be some grand bargain made in early 2013, and the MID is more likely than ever to be curtailed.

     • Will says:

       September 13, 2012 at 9:56 am

       The political clout of the bankers (I heard ABA has about 3,000 in their lobbying contingency on Capitol Hill), homebuilders, realtors, etc. will not permit this. Remember how right after the financial meltdown everyone was talking about “financial reform” – now it has vanished into a black hole called Dodd-Frank that no one (NO ONE) really understands. If any agreement is reached it will be for a “gradual phase-out” which gets adjusted every year until the gradual phase-out is gradually phased out.

       • Irvine Renter says:

         September 13, 2012 at 11:00 am

         “If any agreement is reached it will be for a “gradual phase-out” which gets adjusted every year until the gradual phase-out is gradually phased out.”

         Your cynicism is well founded.

         I do think we will see some gradual phase out of the HMID, but it will be gradual. I could see the HMID being tied to the conforming loan limit and both of these being reduced over time.

         Another wrinkle on this is to raise the standard deduction. They could keep the HMID but raise the standard deduction so fewer borrowers use it.
       • Perspective says:

         September 13, 2012 at 12:14 pm

         “…black hole called Dodd-Frank that no one (NO ONE) really understands…”

         Bless Dodd-Frank and its complications/contradictions! This has been a serious boon to consumer financial services practices!
5. el O says:

   September 13, 2012 at 8:22 am

   This market is a total farce.

   banks can’t proove they actually have rights to the underlying mortgage. That’s the reason banks are not going to process REO backlogs anytime soon, are allowing squatters to squat, and NOD’s are diving.

   Enjoy!

   Foreclosure Stuffing

   http://www.zerohedge.com/news/foreclosure-stuffing

   • Irvine Renter says:

     September 13, 2012 at 11:03 am

     Zerohedge clearly understands what’s going on.

     “Finally, what hasn’t declined, is the number of people who now and going forward will live completely mortgage free just to perpetuate the illusion that “housing has rebounded.” Consider them sunk costs in this latest attempt to reflated housing. Also, thank them if suddenly that home you have wanted to buy is once again just out of purchasing reach.

     As for those who have a mortgage, and are wondering if they should continue paying it or not: why pay? It is now not only the administration, but the banks who are effectively handing out free housing.

     Remember: in this New Socialist Normal, “just say no” when asked to pay for anything.”
6. el O says:

   September 13, 2012 at 8:40 am

   It’s-on like donkey kong….. QE3 a go; MBS purchases up to $40bb per month, no end date. Bill Gross nailed-it.

   Unfortunately, for the sell-side ‘recovery is now’ hopium crowd, this act of desperation prooves the underlying assets are not worth their stated values.

   • gary says:

     September 13, 2012 at 9:29 am

     So living costs go up and incomes come down this is not going to end well for house prices.

     • octal77 says:

       September 13, 2012 at 11:03 am

       Unless mortgage rates go negative?

       What would happen if mortgage rates dropped to exactly zero?

       Are negative/zero mortgage rates even technically possible?
   • Irvine Renter says:

     September 13, 2012 at 11:04 am

     “Unfortunately, for the sell-side ‘recovery is now’ hopium crowd, this act of desperation prooves the underlying assets are not worth their stated values.”

     On the flip side of this, the infusion of cash will make those assets transact at inflated prices and maintain the illusion.
7. Mike says:

   September 13, 2012 at 8:54 am

   Looks like the FED is going to help out the banks by buying mortgages.

   Fed Pulls Trigger, to Buy Mortgages
8. What happened to the MLS inventory? » OC Housing News says:

   September 19, 2012 at 6:02 am

   [...] properties at foreclose auctions thus reducing MLS inventory of REO significantly. More recently banks increased foreclosures 30% as their REO pipeline stabilizes, but this supply is still several months away. Plus, they also slowed their rate of new filings [...]
9. When will more houses be available for sale? » Irvine Housing News says:

   September 25, 2012 at 1:00 am

   [...] properties at foreclose auctions thus reducing MLS inventory of REO significantly. More recently banks increased foreclosures 30% as their REO pipeline stabilizes, but this supply is still several months away. Plus, they also slowed their rate of new filings [...]

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