Foreclosureradar.com has released the February foreclosure report reflecting figures for January 2010 this time indicating we have reached a quiet period for foreclosure activity. In essence the report suggests the foreclosure markets have reached a stalemate of sorts. Although hundreds of thousands of homeowners and investors in California find themselves in the throws of the foreclosure process, few are reaching the conclusion of trustee sale or cancellation.
Although month over month figures show declines in both new notice of default filings and trustee sales, both categories post gains when comparing the daily averages (note: January had only 19 days of sales in California vs the 22 days in the month of December).
You may read the full California Foreclosure Report, or scan the highlights below:
- NOD™s “ a 5.38 percent decrease from December to January month over month vs a 9.5 percent increase by daily average. 25,737 total filings, which is an 36.58 percent decrease over January 2009
- Notice of Trustee Sales “ a 4.74 percent decrease from December to January month over month vs. 10.3 percent increase on daily average. 27,125 total filings, which represents a 8.98 percent increase over January 2009
- REO™s “ a 11.72 percent increase from December to January month over month vs. 29.4 percent increase on a daily average basis. 13,922 total sales ended up in the banks REO portfolios
- Third Party Auction Sales – Up 40.55 percent from December to January moth over month, and a significant increase of 62.7 percent when looked at at on a daily average basis. 3,688 properties were purchased in January statewide by investors at the court steps
- Cancellations – January 2010 cancellations hit 13,853, nearly equal those making their way to bank REO portfolios. This number represents a 4.32 percent increase month over month from December 2010 and a 20.8 percent increase when viewed on a daily average basis. Although the percentage increases are significant, fewer properties completed the process in January 2010 (21 percent) vs January 2009 (31 percent).
- Number of Homes Scheduled for Foreclosure – despite declines in new foreclosure filings in January, the total number of homes in the foreclosure process remains at record levels in the state. 298,132 total properties statewide are in foreclosure process (152,155 in pre-foreclosure and 145,977 Scheduled for trustee sale)
- Lender Discounts at Auction – averaged a 44.9 percent discount to the defaulted loan balance. Third party bidders experienced an average 17.5 percent discount to fair market value by buying at the court steps.
Although the decrease in new filings is a good sign for the housing recovery it does not necessarily indicate we are in recovery or that the worst is behind us. On the Mortgage Bankers Association conference call February 19, concerning the œQ4 2009 National Delinquency Survey MBA cheif economist Jay Brinkmann reminded everyone that long-term delinquencies are a serious problem. The number of borrowers who are more than 90 days late and current REO inventories remain at record levels. Few if any of these seriously delinquent borrowers will ever be able to reinstate their loans and distressed bank assets will continue to have a negative impact on house values across the country for some time (suggesting several years).
The elephant in the room continues to be unemployment. Brinkmann notes that long term delinquencies are heavily a prime fixed rate loan problem. In essence the delinquency problem among borrowers is not necessarily due to interest rate resets or sub-prime mortgages. Rather, the problem stems from good borrowers no longer able to meet their obligations due to lack of income. 2/3 of all loans in this country are prime fixed rate loans. These loans are difficult if not impossible to modify because they typically enter default due to lack of income (unemployment). Finally, the longer these borrowers remain delinquent the more likely they are to never again make another payment.
The precipitous drop in values and runaway defaults may be more manageable for the remainder of the downturn, however foreclosures should continue to dominate the housing news for many more fiscal quarters.
The next hurdle to clear¦ the end of government influences on homebuying (eg. end to tax credits for homebuyers, end of the Fed™s mortgage back securities purchasing program, etc).
Comments (0)