Posts filed under “Foreclosures”
Today’s Housing Bulls are pumped full of antibiotics and steroids, corn fed, genetically modified creatures from a lab. They are not natural; They are not grass fed, free-range, organic Angus cattle. They are unnatural, not found in the wild. These artificial constructs are a joint project of Congress and the Attorney General’s office and the FOMC.
Consider the Case Shiller data — up 2.2% monthly and down 1% year over year — disappointed slightly. But to really understand where Housing is in the cycle, we need to do more than merely look at the chart; we needs to put those data points into broader context. We need to imagine what an organic housing sector would look like versus the Frankenstein creature we have today.
In order to get these flat to negative numbers, an extraordinary amount of firepower has been thrown at Housing:
1. First time home buyers tax credit
2.FOMC QE, Twist, driving mortgage rates down 100+ bps
3.Foreclosure abatements during robosigning
You can see the impact of these efforts reflected in the annotated chart:
Non-annotated origianl Case Shiller charts after the jump
Second Quarter Foreclosure Starts Increase Annually For First Time Since Q4 2009 California Foreclosure Starts Jump in June, Giving It Highest State Foreclosure Rate IRVINE, Calif. – July 12, 2012 – RealtyTrac® (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its Midyear 2012 Foreclosure Market Report, which shows a total of 1,045,801…Read More
Click to enlarge: David Wilson of Bloomberg takes a crack at the Housing turnaround story: Persistently high foreclosure rates show the U.S. housing industry is “bouncing along the bottom” even though sale prices are recovering. The chart above, via strategist Pierre Lapointe of Brockhouse & Cooper, shows the percentage of foreclosed home loans…Read More
> My Sunday Washington Post Business Section column is out. This morning, we look at how the Foreclosure machinery is creaking back to life. The basic concept is that after a year plus of voluntary foreclosure abatements, the banks are now returning to normal foreclosure processing. Here’s an excerpt from the column: “With all that…Read More
Ever since the Robo-Signing scandal erupted in October 2010, banks slowly come to realize that their practices were under ever increasing scrutiny. (I know that’s a Duh! observation for most people, but these are bankers we are discussing).
By early 2011, many of the major money center banks had slowed down their normal foreclosure machinery in a belated attempt to figure out just WTF they were doing internally. There was an attempt to identify the normal processing of defaulted mortgages and see if there was any illegal chicanery going on.
They should have asked the question in the opposite way, as in “Are we doing anything legally?”
As it turned out, an army of outside law firms and 3rd party vendors had by and large run roughshod over the existing laws and legal practices. This did not insulate the banks from the fraud; subcontracting business to felons does not insulate your organization from their illegal behavior.
Regardless, I suspect when some smart bank executive somewhere learned how rampant illegal foreclosures had become, they decided to halt the foreclosure machines altogether to clean up their own house. Contrary to appearances, not every banker is an idiot. As it turns out, its mostly the ones in positions of authority.
Fast forward to the national robo-signer
giveaway settlement. With that now behind them, the voluntary foreclosure abatements have come to an end. Thee was an 18 month period where banks had stopped actively processing these properties. That ended earlier this year. As the creaky, wheezy, inadequate machinery of processing defaulted mortgages rumbles back to life, you would expect to see signs of increasing foreclosures and distressed sales begin any day now.
Cue the RealtyTrac report:
Foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 205,990 U.S. properties in May, an increase of 9 percent from April but still down 4 percent from May 2011.
-There have been an average of 1.6 million nationwide foreclosure starts per year for the past five years.
-Foreclosure activity rose back up above the 200,000 level in May after two consecutive months below 200,000.
-Foreclosure starts nationwide increased on an annual basis after 27 consecutive months of year-over-year declines.
-Bank repossessions are still down 18% year over year. Voluntary foreclosure freezes and increasing preforeclosure sales are the primary factors reasons.
-Judicial states combined posted a 26% year-over-year increase in overall foreclosure activity while non-judicial states combined posted a 20% year-over-year decrease in foreclosure activity.
-Foreclosure starts increased on a year-over-year basis in 17 of the 26 judicial states and in 16 of the 24 non-judicial states.
Banks seem to be getting religion about doing more distressed/short sales than outright foreclosures, as they generate higher priced sales — meaning a greater recovery for the lender, and less of a writedown:
-Higher percentages of new foreclosures are likely end up as short sales or auction sales to third parties (rather than bank repossessions).
-Pre-foreclosure sales have less of a negative impact on home values than bank-owned sales, they still represent a discounted sale where a distressed homeowner is losing his or her home
-Average price of a pre-foreclosure home was more than $27,000 higher than the average price of a bank-owned home.
One last surprising factoid: Georgia now leads the nation with the highest state foreclosure rate (per capita) versus the next 4 states: Arizona, Florida, California and Nevada. Georgia’s foreclosure rate has not ranked highest in the country February 2006.
U.S. Foreclosure Activity Increases 9 Percent in May
RealtyTrac June 14, 2012
All this week, we are looking at the Housing Recovery theme, challenging assumptions that make up the bullish argument. Monday, we began with Debunking the Housing Recovery Story, starting with Shadow inventory. On Tuesday, it was Reality Check on Home Affordability. Yesterday, we looked at the Problem With Home Prices. Today in part 4, we…Read More
Interesting data points from CoreLogic: • The five states with the largest number of completed foreclosures for the twelve months ending in January 2012 were: California (155,000), Florida (86,000), Arizona (65,000), Michigan (65,000) and Texas (57,000). These five states account for 49.7 percent of all completed foreclosures nationally. • The percent of homeowners nationally who…Read More
FT Alphaville gives us the Cliff note version of the national mortgage fraud bank settlement — available in easy to follow graphic or text form: > > Here is the breakdown: Under the agreement, the five servicers have agreed to a $25 billion penalty under a joint state-national settlement structure. Nationally: • Servicers commit a…Read More
Buying foreclosures to turn them into rental properties is tricky business. Mack Companies, a Chicago real-estate firm, invests in about one out of every 40 homes it inspects. MarketWatch’s Amy Hoak looks at why some make the cut and others don’t.
Feb. 3, 2012