Apr172012
How will lenders liquidate their foreclosures?
This year lenders drastically reduced the number of REO they are getting at auction. The numbers are down 62% over this time last year. Further, they have reduced their MLS inventories by nearly 20% from last year’s levels. Apparently, lenders are going to continue to reduce MLS inventory until prices bottom to reverse the two-year slide.
This unexpected change is a desperate move to stop the market’s downward spiral. It means we will likely see depleted MLS inventories through the spring selling season and into the fall. At that point, the new crop of REOs from today’s default notices will enter the market. Lenders are hoping positive momentum from the spring rally will carrry them through the winter. I have my doubts.
Will this engineered bottom hold?
I don’t believe market interventions work. I kept writing throughout 2009 and 2010 that the bear rally was going to fizzle out because it was not stable. The bottom was based on tax credits, reduced supply, and artificially low interest rates. Many wrote me off as a perma-bear, but in reality, I saw the forces at work were much larger than the feeble efforts to move the market.
The tax credit props are gone, but the artificially low interest rates remain, and this time, lenders are even more aggressive about withholding inventory. Lenders probably can cause a short-term reversal in the price trend by withholding inventory, but they will never be able to sustain upward momentum given the huge supply of shadow inventory waiting to be liquidated — at least not if they want to sell their holdings in the next decade.
There are some markets where the false bottom may be durable. The most beaten down markets with the greatest affordability have the most chance of sustained appreciation. Markets like Phoenix and Las Vegas which are undervalued by 40% or more relative to historic norms have plenty of room for buyers to raise their bids. Unfortunately, these markets also have the largest reservoirs of shadow inventory due to strategic default from deeply underwater owners. Markets like Orange County which are only now reaching rental parity are less likely to bottom now because buyers have far less room to raise their bids, and much of the shadow inventory here is at the high end. The lowest rungs of the housing ladder may bottom, but the high end will continue to crumble no matter what lenders do.
Short Sale and REO workshop, Wednesday April 18, 2012, 6:30 PM
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Flood of foreclosures to hit the housing market
By Les Christie @CNNMoney April 13, 2012: 5:33 AM ET
NEW YORK (CNNMoney) — The golden age for foreclosure squatters may soon be coming to an end now that the $26 billion mortgage settlement has been approved. …
Lenders hit the pause button on foreclosures because they “were afraid that anything they did would be under a microscope,” said Eric Higgins, a professor of business at Kansas State University.
As a result, borrowers who were seriously delinquent on their loans have been able to stay in their homes for months or even years without making a single payment. Nationwide, the average time it takes to foreclose on a home — from the first missed payment to the final bank repossession — stretched to 370 days during the first quarter,almost twice as long as it took five years ago, according to Daren Blomquist, the marketing director at RealtyTrac.
In some states, delinquent borrowers have been squatting in their homes much longer. In Florida, the average time was 861 days, and in New York it was 1,056 days — close to three years.
“Perhaps a million foreclosures could have been pursued last year but weren’t,” said Rick Sharga, executive vice president for real estate investment company, Carrington Holdings.
But that’s all about to change, he said. “We’re going to see an increase in the speed of foreclosures and a higher number of foreclosure starts.”
Notices of default have been rising all year, but notices of sale have been dropping, particularly since the start of 2012. Lenders are trying to reduce their inventory by not acquiring more right now.
In fact, there are indications that the pace of foreclosures are already starting to pick up.
While overall foreclosure activity was down during the first quarter, filings were up 10% in the 26 states where foreclosures must undergo court scrutiny, according to RealtyTrac.
You can see the false bottom being engineered in the two graphs above. Lenders consciously decided to stop taking back properties this spring to limit supply; however, they are also gearing up to take back more this summer by increasing their NODs.
The result of this precipitous decline in REO may be a false bottom this year — that remains to be seen — but it certainly means an increase in delinquent mortgage squatting. The decline in foreclosures is not because lenders have run out of delinquent borrowers to foreclose on. Lenders are simply allowing them to squat longer to manage their own inventories of REO.
It was in these judicial states that the processing of foreclosures slowed the most following news of the robo-signing scandal, said Blomquist.
Many banks in these states stopped filing foreclosures unless they were extremely confident it would pass muster in the court. (In non-judicial states, foreclosures are reviewed by a trustee, which is a third party such as a title company and less likely to parse every legal document).
But now lenders can move more confidently, said Brandon Moore, RealtyTrac’s CEO.
In the judicial state of Indiana, for example, foreclosure filings were up 45% year-over year. And in Florida, they were up by almost 26%, according to RealtyTrac.
“The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short sale activity,” Moore said in a statement.
The effect will be strongest in the judicial foreclosure states. So far in the non-judicial forclosure states of California, Arizona and Nevada, the numbers of REO are declining.
The resulting flood could bring home prices down even further — yet another impetus for the banks to clear out their foreclosure pipeline as quickly as possible, said Kansas State’s Higgins.
Then, industry thinking is, the housing market would be able to get back to normal and home prices could eventuallyfind their true value. Some industry analysts, such as the chief economist for listing site Zillow, Stan Humphries, are predicting that could happen as soon as the end of the year.
Zillow estimates that home values nationwide will fall another 3.7% by the end of 2012, and that price will likely bottom out by early 2013.
The way it looks now, we may get a false bottom in the non-judicial foreclosure states while prices plummet in the judicial foreclosure states like Florida and New York. We are still due for another period of declining prices here in the southwest as REO processing picks up again.
Should home prices hit a bottom then stabilize, it would push many potential buyers off the fence, according to Mike Fratantoni, a vice president at the Mortgage Bankers Association. House hunters would no longer be afraid of investing in assets that were losing money.
“The market is already on the verge of turning the corner on prices and this will help,” said Fratantoni.
Mr. Fratantoni echos the wishful thinking of all bankers he represents. Lenders honestly believe rising prices will be self fueling. Further, they must also believe legions of buyers are sitting on the sidelines waiting to get in once prices begin to rise. Lenders are due for a huge disappointment.
First, as soon as prices start rising, many cashflow investors will pull back from the market. The current group of investors buying for cashflow will not be as excited when prices move higher. Perhaps they will be replaced by momentum investors betting on continued appreciation, but I doubt it. Kool aid will not sustain a rally that doesn’t make sense on a basis of fundamentals. Ordinarily, value buyers are required to mop up the entire mess of distressed supply. Lenders are hoping to circumvent this market necessity, and they are likely to be disappointed.
Second, although many readers of this blog are sitting on the sidelines due to falling prices, very few other buyers are. People buy when they are ready to buy. There are simply not enough qualified buyers to absorb the plethora of inventory lenders have. Remember, each REO adds one to supply and eliminates one from demand as the former owner no longer has the credit capacity to get a loan. Lenders will need to wait years for those buyers to come back to the marketplace.
REO to rental programs
I think lenders will liquidate as much of their REO as they can through REO to rental programs. It has several advantages for lenders. First, it gives them immediate capital. They don’t have to wait as they slowly liquidate on the MLS. Opponents of these programs — mostly realtors who fear loss of commissions — postulate lenders will recover less when selling in bulk. Lenders will have to discount the properties more to liquidate in bulk, but they also eliminate a 6% commission to listing agents, so the net may be the same. And since lenders are recovering their capital more quickly, the benefits outweigh the discounts required.
Another advantage of the REO to rental program is that lenders don’t have to dispose of those properties on the MLS forcing prices to move even lower. When distressed sales dominate the market, prices move lower. If lenders can reduce the number of distressed sales, they can stop the decline in prices — which is why they are withholding inventory now. The REO to rental program takes sales off the MLS in 2012-2015 and moves them to 2016-2018 or later. This may stop the declines in the short term, but it will almost certainly inhibit appreciation in the long term as this overhead supply is metered out over time.
Since these two advantages to lenders are so beneficial, I suspect the REO to rental programs will see explosive growth over the next few years as investors gear up to buy billions of dollars worth of single-family homes. That’s how lenders will liquidate many of their upcoming foreclosures.
CAr is reporting a 9.2% monthly increase in prices. Does anyone really think the market rose 9.2% in one month? They have no shame and no credibility.
California Home Prices Going Up, Inventory Down, C.A.R. Reports
After 16 months of year-over-year declines, median home prices in California posted a gain, according to the California Association of Realtors.).
The median price of a single-family home for March 2012 was $291,080, a 1.6 percent increase compared to a revised $286,550 for March 2011, and a 9.2 percent increase compared to February’s median price of $266,660. The month-over-month increase was the largest since March 2004.
When breaking up prices by specific regions, the San Francisco Bay area was an exception, seeing a year-over-year decrease of 1.6 percent, but a 9.1 percent month-over-month increase.
“In areas, such as Los Angeles and Riverside counties, where the Federal Housing Finance Agency (FHFA) wants to implement the REO bulk sale pilot program, inventory is running at levels well below the long-run average,” said C.A.R.
VP and chief economist Leslie Appleton-Young. “These low inventory levels demonstrate that the pilot program is not necessary in California.”
The pilot program involves the sale of government-owned REOs in bulk to institutional investors who will convert them into rental properties. According to C.A.R., in California, the program would call for the sale of more than 600 Fannie Mae-owned foreclosed homes in Los Angeles and Riverside counties.
Recently, 19 California congressmen sent a letter to Edward DeMarco, acting director of FHFA, asking him to make California an exception to the program.
C.A.R. reported that California’s housing inventory declined, with the Unsold Inventory Index for existing, single-family homes down to 4.1 months in March, compared to a revised 5.4 months in February and a 5.4 month supply in March 2011.
Los Angeles county had a 4.3 month supply, and Riverside county had an even lower number, with 3.8 months of inventory.
San Mateo and Santa Clara counties had notably low inventories as well, at 2.4 and 2.5 months, respectively.
Not only is California’s housing inventory down, but according to C.A.R., it takes less days to sell a home there, with the time it took to sell a single-family home dropping to 53.1 days in March 2012, compared to 58.9 days in February and 57 days for March 2011.
…Lenders will have to discount the properties more to liquidate in bulk…
One thing I simply don’t understand about bulk sales:
I presume as a given that the individual properties that are components of the bulk sale will be recorded under the new ownership. (i.e. an Investment Trust)
So far so good.
But will/how the price paid (per property) be also recorded?
Since the total value of the bulk sale will be under “market”, wouldn’t such a sale
have the same effect as a series of single discounted (via MLS) sales and thus put downward pressure on the overall market?
Would not such properties be used by appraisers to evaluate similar properties slated for individual sale via traditional methods? (ie. MLS or private party)
The sales will likely be recorded as a multi-property transaction with the price of the entire portfolio making it impossible to determine the price of each individual property. Some buyers may establish a value for each property and record it as such in the public record (they will have to for internal accounting anyway). Typically, these transactions would be ignored by appraisers just as auction sales are because they did not occur in the open market subject to bidding by financed buyers. In short, these sales will not become low comps continuing to bring prices down.
Each property will have a publicly available County Assessed Value too.
The more the speculators, the more the price volatility.
Due to surging carry-costs + OC pool of distressed tenants is filling-up, net cash-flow compression commences and eventually turns negative. Meanwhile, owner equity is trapped because the capital is not deployable. Once this dynamic materializes, speculators will offload stat.
Reality is, as time passes, there will be boatloads of freshly remodeled inventory coming online (at someone elses expense) at reduced prices.
That’s exactly what happened in late 2010 and throughout 2011. Apparently lenders believe it will be “different this time.” I have my doubts.
Pertaining to the current high % of SFR cash deals, what the mainstream media has failed to disclose is that many large institutional and PE groups who’re currently out conducting cash deals en-masse have access to the feds discount window. Problem is, they’ve actually borrowed the cash to do deals with a fairly short re-pmnt window. LOL!
Clearly, once triggered, a voluminous rush to the exits lies ahead.
tic…tic…toc….
It’s all about income…
median annual income for a male full-time, year-round worker in 2010 — $47,715 — was virtually unchanged, in 2010 dollars, from its level in 1973, when it was $49,065.
http://www.zerohedge.com/news/guest-post-why-middle-class-doomed
If incomes are barely keeping up with inflation, there is no reason to think house prices should fare any better.
It would be interesting to find some people whose careers spanned the last 30 years and whose income was roughly constant. e.g. A guy started working a blue-collar industry and by age 30 in 1973 was earning $50K; and now at age 60 in 2012, is making $50K.
It may not be the same guy, but I imagine you can find the same job where wages have only kept pace with inflation.
Computer programming and DBA jobs have been basically stagnant in Silicon Valley since the late 90’s:
Experienced 120k
Senior 150k
Meanwhile house prices have tripled or so …
I understand that mortgage lenders believe they can sufficiently control market supply and preserve higher prices. I could be mistaken, but it looks like home builders in OC have other ideas that don’t align with the sole interests of banks.
http://lakeforest-ca.patch.com/articles/baker-ranch-project-gets-commission-recommendation
“Baker Ranch, a 2,400-home community developers hope to construct in Lake Forest, is inching closer to reality. City commissioners on April 12 voted in favor of the project, which would bring thousands of homes and a host of small parks to a 387-acre swath of the city.”
Although I disagree that the homebuilders in this case think they can haul in $700K prices in LF, it’s still interesting that prospective buyers may have some alternatives to consider in the future, not just a slew of remodeled REOs that the banks got tired of holding for years.
This is a very difficult time to be a builder. Builders are heavily influenced by changes in the resale market, and now with a cartel of banks controlling the flow of competing product, builder’s success or failure rests totally on what lenders do. If lenders start releasing more product, builders will be crushed. If lenders can meter out the flow slowly, builders can sell profitably.
This would be so much easier if the reason for the less REO on the market was because lenders were out of inventory, there was no shadow inventory, and borrowers were current on their payments. We are still three to five years away from a stable market builders can rely on and lenders don’t control.
If you look at the building plan for Baker Ranch, try to find the schools to be built that will support those home owners….. it won’t take long because there aren’t any.
According to the Mayor of LF in November of last year, none of the upcoming LF developments have plans for new or overflow schools.
That omission is really going to impede the sales of those homes.
2400 homes to go in at Baker Ranch, and just the other day I talked to a older mexican gentleman who had lived on that ranch for 50 years. Still does, for now, just behind a hill where the new Alton extension is. Damn shame.
725 Homes are going to be built on the old water district property.
65 Single family homes are to be built at the end of Peachwood.
Giant sports park is being built at the Portola Pkwy / El Toro road intersection.
Only so much room in this 3 lb bag, but the good ol’ boy network of the LF City council, wants to stuff another couple lbs of sh1t in the bag. I also believe they used “Eminent Domain” to stea…er, take land from others to further their plan.
The council also would give Nixon a woodie in how fast they contacted the FEDS to bust up those dangerous cannabis clinics.
Well, every area has a detailed economic forecast by experts. The banks and bigger homebuilders and apartment builders buy them at big prices and also have their own economists on staff (as does the Fed). These experts can predict pretty accurately home prices and sales for the near term but are tripped up every time by either international money flows and widespread institutional interdependence, or localized utter finance corruption (such as the appraisers and banksters did during the last years of the bubble, eg). Here’s a set of statistics for the East that seems to defy reported average state and national trends and yet is visible, to show that local markets can be clobbered while others stabilize (witness, the fiasco collapse of pricing in big markets Chicago and Atlanta etc). http://www.businessinsider.com/home-prices-across-the-northeast-are-still-declining-2012-4 Fairfield-Greenwich are ultra-ultra luxury, so not to worry…that can’t decline much…well, not in one year….oh, it did, eh? Nice end warning there by the author Mr. Jurow, isn’t it?
Keith Jurow and I correspond regularly. When he was telling me about the huge declines in those previously immune markets, I was floored. Atlanta was a big surprise as well because it didn’t have the bubble rally. They got the collapse but not the rally to precede it. It prices drop in Atlanta, the city must be a treasure trove of good rental properties.
How common has it been historically for people to buy their first home in their late-30s/early-40s? With this bubble now lasting over a decade and new market manipulations arising every six months, its quite possible that an entire generation of homebuyers is going to be in limbo. This seems like it would have a huge affect on future markets. If you’re pushing 40 and still renting because of all these shenanigans, when in past “normal” times you’d be on your second or even third home, there’s definitely something wrong with the picture.
Strangely enough, prior to the 00s, most people didn’t qualify for home ownership until their 30s. Most people in their 20s didn’t have the income or the down payment to get a home.
The housing bubble froze me out of home ownership in my late 30s when I would ordinarily have owned. In fact, I sold my first house in Florida, moved to California, and found myself priced out, so I waited… and waited… and waited… and I am still waiting.
Just anecdotal, but in the past few months I have heard a few citizens around 30 years of age say they had too little income and too much debt to:
a) allow mortgage payments on even a $250K balance
b) allow them to accumulate a down payment in the first place
The debt, in two of the conversations I had, was student-loan debt. I don’t know about the others – that was in a bar, and they were nearly strangers – but I’d bet it was student loans in that case as well.
My sense is that people are still crazy for home debtorship, and will take on huge obligations to get it; there really has been little in the way of an attitude change as to real estate. But the prices will still have to come down, because for the younger demographic it’s impossible at these prices.
It’s good to see you again. Thanks for stopping by.
Student loan debt is one of those hidden drains on demand nobody is talking about. I suspect you are correct, and despite the desire to take on a huge mortgage, the ability simply won’t be there. The bank already has them paying a huge student loan, so they don’t have enough income left over to take on a huge mortgage debt.
I wonder what percentage of pay of 20-somthings goes toward debt service? Between student loans, car loans, credit cards, and mortgage debt, all of it, I imagine….
Does anyone know why it was thought to be a good idea that student loans should no longer be be extinguishable in bankruptcy proceedings?
There were far too many instances of doctors and lawyers declaring bankruptcy right out of college to extinguish their huge debts. They knew they were going into high-paying jobs and they had no assets, so it was a smart move for them. You can’t repossess and sell a college education, so to prevent post-graduation bankruptcies, they made them illegal.
Also note that student loans are non-dischargeable, so smart people will pay those loans ahead of a mortgage when times get tough. I bet mortgage lenders love that! 🙂
The “money” quote for me:
VP and chief economist Leslie Appleton-Young. “These low inventory levels demonstrate that the pilot program is not necessary in California.”
Don’t unload these bulk REO’s in our area. Pretty please….
This is one area where the realtors argue against what they really want. They obviously want the commissions, so they don’t want the bulk REO sales to cut into their income, but they also don’t want these REO on the market to hurt sales prices. They can’t have it both ways. Either these REO come onto the MLS and crush prices — and generate commissions — or these REO get shelved in rental programs and stabilize prices — at the expense of realtor commissions. It’s one or the other.
On RE sales commissions:
Under current market circumstances Realtors could always embrace the “farmer” scenario more: cultivate the opportunities where they stand which may perhaps be more lower priced sales transactions (so lower than historical commissions) but probably more volume over a period and more certainty of a transaction actually taking place with fewer objections to price.
This could be better than the “elephant hunter” sales scenario, i.e. far fewer RE sales transactions (“blue birds”) over a period at higher prices with high commissions, but perhaps higher risk of buyer objections, deal delays or failures.
The reality is that Realtors probably exert the same amount of time and effort on a sales transaction regardless of where the actual sales price lands. They probably dislike the idea of doing the same amount of work but earning lower and lower commissions (from lower market prices).
This leads to the bigger question about %-based sales commissions in the first place. Perhaps commissions should reflect thereal value of the service provided by Realtors and be more oriented toward a cost-plus, fixed fee? That way the market price of the transaction is irrelevant and the insane cheerleading and duplicitous behavior could finally stop.
I’ve rented a small house in Oakland for 15 years. The neighborhood is so-so, but the realtors always say it’s ‘desirable.’
(The gunfire around here last year was the worst I can remember, and just yesterday a guy was shot dead in a car less than a mile from my house; a police helicopter hovered for hours as they searched for the perp. Still, people are paying what seem to me ridiculous prices, and realtors flipping houses are asking even more-ridiculous prices; less than a half-mile up my street, the neighborhood suddenly gets a different name, with still-higher prices.)
I’ve been looking for a house to buy since last summer, and the market here in the East Bay, while not as bad as San Francisco or the Peninsula (i.e., Silicon Valley), is still nuts (especially Berkeley). Per Redfin, March inventory of houses for sale was down 43.5 percent in Oakland compared to March 2011, and down 46.6 percent in Berkeley.
I would love to know how much this is due to shadow inventory or banks delaying foreclosure – I suspect that plays a large part, particularly in the mid and high tiers. Certainly the low end of the market in Oakland has declined significantly, but those are mostly crappy houses in very-iffy neighborhoods.
You can go to foreclosure radar and look at the filings in your neighborhood. If it’s like everywhere else I look, it will be loaded with shadow inventory. For example, right now, there are more houses with notices filed in Irvine than there are houses for sale on the MLS. Less than 1% of the listings are REO, but more than 100 times as many are going through the foreclosure process — and that doesn’t count the people still delinquent but the banks haven’t filed on yet.
Thanks – I didn’t realize you could get some data for free.
Here’s how it breaks down in my zip code – which encompasses low, mid, and even some high-tier areas: 41 houses listed as ‘auction’, 25 as REO, and 50 as ‘preforeclosure’. And there are about half a dozen other zip codes in Oakland.
In their March 2012 report, the founder/CEO says:
“It is easy to see why some analysts continue to predict that there will be a wave of foreclosures. Clearly we still have far too many homeowners in trouble, and with the recent Attorney General Settlement over robo-signing, and other issues, it seems completely logical that a wave of foreclosures would follow. It won’t.”
“To reach the conclusion that there will be a wave of foreclosures, you have to assume that the banks either want to foreclose – they don’t – or will be forced to foreclose – they won’t. In September 2008 the rules of the game were changed to help the banks remain solvent, and since then it has been in their best interest to find reasons to delay foreclosures through whatever means necessary. I don’t see that changing anytime soon.”
Comments?
He’s right. Lenders are allowing millions of delinquent mortgage holders to squat in their homes. The question is how long will they let this go on?
http://www.americanbanker.com/bankthink/why-are-we-seeing-fewer-foreclosures-settlement-short-sale-dual-tracking-1048442-1.html?zkPrintable=true
Why Are We Seeing Fewer Foreclosures?
Rick Sharga
APR 16, 2012 3:51pm ET
Industry watchers expecting foreclosure trends to follow a predictable path are destined for surprises, as the recent figures from RealtyTrac demonstrate. March marked a 4-year low in new foreclosures, with actions increasing in judicial states, but surprisingly declining in non-judicial ones. In the aftermath of the AG settlement with the major servicers, this result seems counterintuitive to say the least. However looks may be deceiving on closer examination.
The rate of foreclosure activity does indeed appear to be increasing in the states most directly affected by the robo-signing delays and the negotiations involved in the AG settlement. But why the drop in the non-judicial states when we have a mountain of seriously delinquent loans that should be in the foreclosure pipeline by now, but instead are still waiting in the wings?
The answer may lie in the AG settlement itself. The top servicers control a huge percentage of the loans currently in default, as well as those that are delinquent and on the precipice. The majority of these are in non-judicial states, most notably California, which had a massive number of loans in the Countrywide portfolio alone. Dual-tracking, the practice of working with borrowers on loan modifications at the same time foreclosures are under way, was specifically disallowed because of massive consumer complaints that foreclosures too often happened before mods could be processed. With dual-tracking no longer permitted, and with the affected servicers tasked with writing down at least $20 billion in principal on these loans, it is less of a surprise to find foreclosures declining in those states.
Holding off on new foreclosure actions and standing pat on defaulted loans that would normally already be in the process makes sense, as servicers determine which borrowers are eligible for the principal balance reductions they are required to make under the settlement. By focusing on pools of loans in the states with the most foreclosures and the largest drop in property values, servicers can get to their respective increments of the $20 billion requirement more quickly.
Foreclosure alternatives such as short sales are also ramping up, and we can expect to see a significant increase in them from the major servicers in the coming months. It stands to reason from a servicing perspective to approve a short sale, forgive debt that qualifies toward the servicers’ principal balance reduction requirement, and resolve situations quickly to reduce loss severities. This is often more attractive than modifying loans for borrowers who have not made payments for many months (or even years) and hoping they don’t redefault. The deed-for-lease concept, such as the program recently announced by Bank of America (BAC), may also gain ground for the same reasons. Servicers other than those named in the AG settlement can be expected to follow suit.
Fast-tracking short sales and other programs are to everyone’s best interests for a variety of reasons, including bringing qualified borrowers to the market, making it possible for departing ones to return years sooner, and stabilizing the real estate inventory to accelerate the housing recovery.
There are also regional issues to consider, notably the “Homeowner Bill of Rights” proposed by California Attorney General Kamala Harris, and Nevada’s new law regarding trustees, which makes illegal repossession of homes (including robo-signing) subject to criminal charges. The California legislation consists of six bills that affect all mortgages in the state, not just those covered by the AG settlement. It includes provisions for ending dual-tracking, providing single points of contact, tenant protections after foreclosure, increased law enforcement, anti-blight measures and a special grand jury for mortgage crimes and foreclosure abuse. Expect a flurry of similar responses in state houses across the nation, particularly in an election year.
Additionally, reductions in foreclosure actions might be attributed to the systemic delays most servicers are seeing in their pipelines. Foreclosures are more difficult to complete, making for fewer scheduled trustee sales and fewer assets becoming REO. It all means the number of foreclosure actions will be lower than expected, overall.
The recent foreclosure figures are reminders that statistics are readily misunderstood and often misleading. Examining the stories behind the story reveals that the decline in foreclosure activity, while somewhat unexpected, is no longer unexplainable.