Even though this RealtyTrac reportmentioned how foreclosures had dropped significantly in 2011, thelatimes.com couldn’t resist starting off their coverage with these two scary paragraphs:
California and other states are likely to see an enormous wave of long-delayed foreclosure action in the coming year as banks deal more aggressively with 3.5 million seriously delinquent mortgages.
And experts said that dealing with the foreclosure process, from issuing notices of default to selling repossessed homes, is likely to push housing prices lower this year before the real estate market has a chance to recover.
There was no mention of pushing “housing prices lower” in the RealtyTrac report, so I wish they would cite their sources. The banks sure seem happy with the current pace of foreclosures in San Diego County – here are the last three years of activity:
Anyone, including reporters, can get a preview of 2012 foreclosure activity by looking at the trend of default notices – and it doesn’t look like ‘enormous wave’ conditions just yet:
I guess we can expect the mainstream media to assist with market overshoot when they insist on puffing their reports with the same tired old stuff.
Here’s a new chart – the price/value results of trustee sales. Even though bidders are running up the purchase prices to 18.5% above the opening bids, on average, this report shows that they are still selling for 18.6% below market value. The dumps must be going out at bargain-basement prices, because the quality properties seem to get bid up to within 10% of market.
Today I was on the first broker preview of the year (filming “Ride Along with JtR”), when I came across this REO in Del Mar Heights. The assistant was running open house, and said it had just been inputted onto the MLS – but it’s not on the open market as of this printing.
I think she said that the price will be $1,749,000 – it was listed for $3,295,000 in summer of 2010.
It has its quirks, and could sit for weeks or months without selling. But we saw how hot the 92014 has been lately (2011 sales were +62% higher than in 2010, and pricing was +4%) so it could go flying off the market, because everyone wants a bank deal in Del Mar Heights!
It sold for $2,200,000 in 2005, and financed 90%, but the opening bid at November’s trustee sale was only $1,464,750.
Leave your price in the comment section, and the closest guesser will receive four tickets to the swanky Del Mar Turf Club for one day during the season (July 18th – Sept. 5th). You’ll have your own table with TV to watch the races and replays, plus waitress service! Or, if you prefer a more casual day, (guys have to wear coats in the Club), the winner can select Choice 1A; four box seats near the finish line, also with waitress service.
Investors from Asia are taking advantage of housing prices that have plummeted in recent years, buying foreclosures and short sales at below what it would cost to build them.
Kevin Chu’s Hong-Kong investment firm owns property in Las Vegas, but he’s never seen any of it. So his first visit to the U.S. is to inspect the houses in Las Vegas.
In the past 18 months, the firm he works for, The Creations Group, bought up distressed homes all over the U.S. — including 13 Las Vegas houses at fire sale prices.
Tracy Bennett, the local property manager, is driving Chu to see one of his firm’s houses that has just been renovated.
She points to a disaster of a house that’s clearly vacant. Blue graffiti cover the garage. Trash is piled in the yard. Before anyone can say anything, Bennett laughs.
“I’m kidding,” she says.
But it is a reminder of the bleak housing reality here, where foreclosure rates are more than three times the national average. Thousands of bank-owned properties that sit empty. Thankfully, for Chu, his real house down the block is in much better shape.
It’s a modest one-story house. The firm bought it for $55,000. At the height of the market, it could have sold for more than $200,000. Inside it’s clean, with fresh paint. It’s ready for a tenant.
“It looks very good, much better than I expected,” he says. In fact, the U.S. housing market as a whole looks much better than expected to Chu’s boss, Danny Lim.
“In some places the types of prices that we are getting, I think it’s you know, once in a generation, perhaps once in a lifetime kind of opportunity,” says Lim, who was in Miami looking for more property.
Andy Chu, a local real estate agent, says he is advertising in the Asian newspapers. He points out the strong rental market in Las Vegas means houses here can quickly become income-producing properties.
“We let them know, hey look, U.S. is a good place to invest,” he says.
Andy Chu’s clients from Asia are now a quarter of his business, and he wants more. They’re good customers. They often will buy several properties and pay in cash, which means he doesn’t have to spend months waiting for financing to be approved.
“From a business perspective, you can get paid in four days or get paid in six months,” he says.
COSTA MESA — It will be a Charlie Brown Christmas after all.
Though Jim Jordan’s foreclosed home at 2269 Santa Ana Ave. now belongs to Wells Fargo, the plywood psychiatry booth, character cutouts, Santa Claus stage in the backyard and other “Peanuts” features that entertained the community for decades, still belong to him.
Over the weekend, Jordan worked out a deal with city CEO Tom Hatch to take the “Snoopy House” display to City Hall.
“We’re going to make it happen in one place or another,” said Jordan, 59.
“We talked about bringing the Snoopy House to City Hall to continue the rich tradition that’s been here for many decades,” Hatch said. “Hopefully this kind of display can bring the community together.”
There’s a Save the Snoopy House Facebook page, a Twitter account and residents looking to help Jordan financially.
One real estate company owner offered a vacant Eastside lot a block away. The owner said with a lawn mower, some trash bins and volunteers, Jordan’s “Peanuts”-themed Christmas display could be a short walk from the old Snoopy House off Albert Place, where it stood every winter for the last 44 years.
Chick-fil-A offered to set up the Peanuts gallery in front of its location on Bristol Street and MacArthur Boulevard in Santa Ana. Costa Mesa residents also offered their lawns.
Two loyal supporters, Jackson Dugan, 10, and his sister, Dayle, 8, set up shop Saturday at the Snoopy House home and sold lemonade at 50 cents a cup. On Monday the entrepreneurial duo handed Jordan $230.
“People were giving donations,” explained Jackson and Dayle’s mom, Lisa Dugan. “They just wanted to help him. They love the Snoopy House … it’s been there every year. It’s the magic. It’s the spirit of Christmas.”
Jordan set up a trust over the weekend that accepts donations. The money will help Jordan pay for his lawsuit against Wells Fargo; he’s fighting to keep his house, which he uses as a rental property.
Jordan claims that shortly after the home went into default in August 2010, the bank told him it had stopped moving toward foreclosure while considering his loan modification application. Three months later, the bank bought the house and told Jordan that it had not stopped the process.
“I’d really like to get them back to the bargaining table,” Jordan said.
DOB sent in this latest bank-speak which was seen in a few media outlets, like theSFBT:
CEO Brian Moynihan said Tuesday that the pace of selling its foreclosed home inventory is picking up as “tons” of investor cash comes into the market.
“Where you’ve had the ability to get a hold of properties … get them cleaned up, back on the market, they have moved,” Moynihan said at a conference put on by the bank in New York. “It moves as fast now as it’s ever moved.”
“You’ve seen this thing improve slowly but surely,” he said. “There’s tons of investor money coming in” to the housing market.
BofA’s top brass has been eager to resolve its bad loans by speeding up the foreclosure process, which varies by state. USA Today reported last week that at the current pace of foreclosures moving through the system, it could take decades for the market to clear all that property in some states like New York.
In August, Bank of America picked up the pace of issuing default notices, the first step in the foreclosure process, according to ForeclosureRadar.com, a research firm in Discovery Bay. Moynihan said today that home prices are “bouncing along a bottom.”
And on a positive note, Moynihan says the bank’s mortgage delinquencies continue to decline.
REO sales will peak when the banks decide to peak them. FromHW:
The sale of properties repossessed through foreclosure may not peak until 2013, keeping home prices from a meaningful recovery for some time, analysts estimated Monday.
Nearly half of the more than 552,000 REO properties liquidated in the first half of 2011 were held by private banks. In the years ahead, the government — including the Department of Housing and Urban Development, Fannie Mae and Freddie Mac — will begin taking a majority of the activity.
In 2013, REO sales could reach 1.48 million properties, according to estimates from Bank of America Merrill Lynch analysts, a 10% increase from projected amount in 2012.
“We do not expect to see anywhere near the downward pressure on home prices that we had back in 2008, since the expected percent changes in liquidation volumes are so much smaller,” BofAML analysts said. “But home prices are starting from a negative point, so the implication is that home prices will continue to decline as the foreclosures transition through the pipeline.”
Most of the projected increase will come as the government begins to unload its backlog. The government-sponsored enterprises and HUD, analysts estimate, will liquidate roughly 595,000 properties in 2013 alone.
Total REO liquidations wouldn’t drop below 1 million until 2015, according to BofAML.
The Obama administration began work last month developing new strategies for selling this mass of properties, which may involve renting more of them. The Federal Housing Finance Agency is also working on a way to refinance more underwater borrowers to entice them from walking away.
“I would essentially rent the house back to those who are living in them now,” said Susan Woodward, an economist with Sand Hill Econometrics. “I don’t think it makes a lot of sense to push 4 million people out of their homes when they’re victims of a slower economy they had nothing to do with.”
Other analysts were skeptical of anyone who could predict accurately what the GSEs or Washington would do, especially after the elections in 2012.
“Do they really think that the government under any administration would let 500,000 homes hit the mark and crash prices all over again, six years after the first crash?” said Scott Sambucci, chief analyst at Altos Research.
He said even if unemployment improved by a full percentage point or two — which he said would be a stretch — the market would still struggle to meet such a supply influx.
“It would crash the market, so no, it’ll never happen,” Sambucci said.
Daren Blomquist at RealtyTrac, which monitors foreclosure filings across the country, said the sale of REO is on track to reach 825,000 by the end of 2011.
“We do expect the REOs to pick back up in 2012 as lenders push through some of the foreclosures delayed by processing and paperwork issues,” Blomquist said, adding the inventory needed to be sold could reach well into the millions.
Bank of America has been “working on their system”.
In July, they conducted 258 trustee sales of properties throughout San Diego County – either sold to third parties or back-to-bene.
Yesterday they blew out 79 properties in one day!
There are several notes:
1. They were pricing them very aggressively.
In July, they sold 33% of their trustee sales to third parties. Of the 79 properties offered yesterday, 72% were purchased by third parties. Yesterday’s properties also sold for an average of $48,000 over the opening bid, which is phenomenal when the average price was in the $200,000s. BofA was looking to dump some properties!
2. The big buyers must have been tipped to have that many third-party sales – B of A only had nine trustee sales the day before. But if the volume continues, the mom-and-pop bidders will be back – most have retreated due to the few properties available, and how the big bidders have run up the prices/squeezed the margins, in order to dominate the environment.
3. If they continue, it’ll create some buzz, right as the market is poised to go to sleep for the rest of the year. B of A has 510 properties scheduled for next week!
4. These properties will be selling for retail, or retail-plus.
A. Flippers will do the 3-day makeover and list for top dollar – and get it. Buyers, especially first-timers, want to buy a cleaned-up, renovated home, and close in 30-45 days.
B. The back-to-benes will be offered at retail, even if they aren’t fixed up. They haven’t been giving away any of their REOs lately, and thankfully, everyone loves a bank deal.
C. Some day, people will question the media’s insistence that foreclosures are bad. It’ll probably take the other servicers to notice how it’s working for B of A, and do the same with their portfolios. If they manage it properly, they could create buzz plus momentum, and some true market clearing.
5. Only six of the 79 were in our NSDCC, but there are another 165 on their auction list, scheduled over the next couple of months.
Here are the recent foreclosure stats for San Diego County.
It appears that the banks/servicers have found a steady rut for their foreclosure production:
It’s hard to believe that NODs are down 15%.
It’s doubtful that they’ll deviate from the plan if it is working? They declare that they are doing more short sales in order to help people avoid foreclosure, and the government gets off their back.
Foreclosures are inching up again, while closely watched defaults shot up 34 percent in March — the largest monthly increase for San Diego County in more than two years.
Analysts at DataQuick Information Systems on Tuesday reported there were 1,837 mortgage defaults in March, up 34 percent from February but down 19 percent from a year ago.
The company’s numbers also show there were 1,047 foreclosures in March, a 17 percent increase from February but an 8 percent decrease from the same time last year.
Some industry leaders predict monthly numbers will continue to rise this year as banks are apparently becoming more expedient with foreclosure processes and people continue to walk away from their homes, even when they’re able to afford the mortgage payments.
March’s monthly increases may indicate that lenders are becoming “more comfortable going forward with notices of defaults,” said Dave McDonald, a branch manager for New American Funding in Bonita and a past president of the California Association of Mortgage Brokers’s San Diego chapter.
Another factor that could lead to more defaults: homeowners who took on five- and seven-year adjustable rate mortgages, or ARMs, during the height of the market. McDonald said those consumers are expecting drastic changes in their loan terms this year and in 2012, which could mean increases in monthly payments. In the past, he’s seen them go as high as $800 more a month for some homeowners.
Since refinancing is an unlikely option, McDonald suspects many will end up defaulting on their loans. “It’s the next wave (of defaulters,)” McDonald said.
Gary Laturno, a San Diego real estate broker whose expertise is in foreclosures, is still in the wait-and-see category with foreclosures and defaults this year.
Still, Laturno concedes the state of the county’s distressed market is volatile. He’s still seeing a number of “strategic defaulters,” homeowners who walk away from their homes because they are so underwater, even when they can afford to make the payments.
“I think we have a long way to go” before the distress is over, said Laturno, also a San Diego attorney.
