The Foreclosure Report - August 2012

Foreclosure Starts Down Dramatically

August 2012 California Notice of Defaults were down 23.6 percent from the prior month, and down 49.1 percent compared to last year. In Arizona, Notice of Sales were down 16.1 percent from the prior month, and down 42.2 percent compared to last year. The decline in Foreclosure Starts is even more significant on an average daily basis, down 30.2 percent from the prior month in California with 23 business days in August vs. 21 business days in July.

Foreclosure Sales were up 23.7 percent in California on a month over month basis. On an average daily basis, the increase was up 12.9 percent from the prior month.

In Oregon, non judicial foreclosure activity almost came to a halt, with Foreclosure Starts down 80.6 percent from the prior month and down 93.9 percent compared to last year, most likely indicating a move to judicial foreclosures as discussed last month.
"We continue to see reports that there will be a wave of foreclosure sales after the election or at the start of the year,” stated Sean O'Toole, Founder & CEO of ForeclosureRadar. “The lack of Foreclosure Starts this month puts a nail in the coffin of this theory. There will be no wave of foreclosures for at least five months. The good news for investors and first-time buyers is that Foreclosure Sales have at least remained flat or slightly up, continuing to provide some opportunities in the meantime."

     

Foreclosure Activity Shows Mixed Results

May 2012 Foreclosure activity was mixed with lenders more likely impacted by local market conditions then any overall trends. In Arizona, Foreclosure Sales were up 30.1 percent over last month but still down 39.2 percent vs. May 2011. In Oregon, Foreclosure Sales were down 21.3 percent over last month but flat vs. May 2011. In California, Foreclosure Sales were up 6.1 percent vs. previous month, driven by Sales to 3rd parties that were up 14.0 percent. Nevada's Time to Foreclose is continuing to increase, up 9.4 percent to an all time high of 464 days. This is due to the Foreclosure Fraud Reform Law (Assembly Bill 284) that went into effect October 1, 2011.

In California, three Senate Bills under the Homeowner Bill of Rights are being actively debated by the legislature. While Senate Bill 1473, Senate Bill 1474, and Assembly Bill 1950 have already been passed, they should have little impact on foreclosure activity throughout the state. However if passed, two of the three remaining bills (Senate Bill 1470 and Senate Bill 1471) will significantly impact the Foreclosure Marketplace.

The Foreclosure Report - June 2012

Foreclosure Inventory Continues To Decline

June 2012 Foreclosure Sales were significantly down in the three largest foreclosure states in our coverage area. California Foreclosure Sales were down 13.4 percent over last month, and down 48.8 percent vs. June 2011. Arizona Foreclosure Sales were down 18.5 percent over last month, and down 42.1 percent vs. June 2011. Nevada Foreclosure Sales were down 14.6 percent over last month, and down 72.1 percent vs. June 2011 driven by the new regulation that took effect in October 2011. In addition, Foreclosure Filings are flat to down in all states in our coverage area, both on a month over month basis and vs. previous year. Arizona Notice of Sales were down 27.7 percent over last month, Nevada Notice of Defaults were down 22.7 percent over last month, and California Notice of Defaults were basically flat, being down 0.9 percent over last month.

We already have significantly low home sales in the market today, and with the declining level of Foreclosure Sales the inventory will continue to decrease. In California, banks take on average 272 days to resell properties they take back at auction, thus, Realtors, investors, and homebuyers should brace themselves for significantly less inventory in next years' selling season.
"California Governor Jerry Brown signed into law the Homeowner Bill of Rights, an anti-foreclosure package which naively thinks that slowing foreclosures will benefit homeowners and the economy by leaving those owners stuck in their prison of debt," stated Sean O'Toole, Founder & CEO of ForeclosureRadar. "We've long said negative equity, not foreclosures, are the problem, and this bill does nothing to truly help underwater borrowers. Fortunately this bill was watered down significantly from its original form, so we don't expect it will have the same impact that we've seen from more aggressive legislation in Nevada. The most ironic part of this bills passage is that foreclosures have already plummeted, and that the real housing crisis in now a lack of homes available for sale. Next spring, we expect there will be half as many REO's available for sale in California, significantly impacting overall home sales and hurting homebuyers, investors, real estate related services and the economy."

Foreclosures are tale of 2 legal systems

By Inman News
Inman News®

Trends in serious delinquencies and foreclosures continue to be a tale of two legal systems.

According to loan data aggregator CoreLogic, in the 24 states where courts handle the foreclosure process, 13 saw foreclosure inventory rates increase in March when compared to a year ago. In contrast, the percentage of homes in the foreclosure process during March posted annual increases in only three of 26 nonjudicial foreclosure states.

The picture was much the same for serious delinquencies of 90 days or more -- 15 of 24 judicial foreclosure states saw an annual increase in serious delinquency rates during March, compared with just five of 26 nonjudicial foreclosure states.



"Nonjudicial foreclosure markets like Nevada, Arizona and California are experiencing significant improvements in their shares of delinquent borrowers," said CoreLogic Chief Economist Mark Fleming in a statement. "Some judicial foreclosure states are also improving, like Florida, but not to the extent of nonjudicial markets."

Nine out of 10 states with the highest foreclosure inventory rates were judicial foreclosure states: Florida (12.1 percent), New Jersey (6.6 percent), Illinois (5.4 percent), New York (4.9 percent), Connecticut (4.5 percent), Maine (4.4 percent), Hawaii (4.3 percent), South Carolina (3.8 percent) and Indiana (3.5 percent).

The exception was Nevada, a nonjudicial foreclosure state with a 4.9 percent foreclosure inventory rate, the fourth highest in the nation. The three nonjudicial foreclosure states that saw increases in foreclosure inventory rates were Oregon (up 0.4 percent, to 3.1 percent), Mississippi (up 0.2 percent, to 2.8 percent), and North Carolina (up 0.4 percent, to 2.6 percent). Washington D.C., also saw foreclosure inventory rates climb by 0.2 percent, to 2.5 percent.

Nationally, CoreLogic said about 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in some stage of the foreclosure process during March, compared with 1.5 million homes at the same time a year ago.

CoreLogic counted 852,591 completed foreclosures in the 12 months ending in March, and 3.5 million since the start of the financial crisis in September 2008.

Lenders don't repossess or sell every home that begins the foreclosure process -- some borrowers are able to get current on their loans again, or negotiate a short sale or loan modification.

Loan servicers grew their inventory of "real estate owned" or REO properties more slowly, as the pace of REO sales picked up. CoreLogic calculated the "distressed clearing ratio" -- REO sales divided by completed foreclosures -- as 0.81 in March, up from 0.76 in February. The higher the distressed clearing ratio, the faster the pace of REO sales relative to completed foreclosures.

Compared to a year ago, the number of completed foreclosures has slowed," said CoreLogic CEO Anand Nallathambi. "Since the foreclosure inventory is also coming down, this suggests that loan modifications, short sales, deeds-in-lieu are increasingly being used as an alternative to foreclosures to clear distressed assets in our communities," as some industry observers had predicted would happen in the aftermath of the robo-signing settlement.

Among the top 100 metro markets by population, 35 showed an increase in the year-over-year foreclosure inventory rate in March 2012.

Foreclosure filings up in most markets

By Inman News

The number of homes hit with foreclosure-related filings picked up during the first three months of the year in more than half of markets tracked by public records aggregator RealtyTrac, "an early sign that long-dormant foreclosures are coming out of hibernation in many local markets," the company said.

The number of homes subjected to some type of foreclosure filing increased in 114 of 212 markets with populations of 200,000 or more, compared to the fourth quarter of 2011.

Foreclosure-related filings were up from quarter-to-quarter in 26 out of 50 of the nation's largest metropolitan areas, including Pittsburgh (up 49 percent), Indianapolis (up 37 percent), Philadelphia (up 30 percent), New York (up 24 percent), Raleigh, N.C. (up 23 percent), and Virginia Beach, Va. (up 22 percent).

Many industry analysts expect loan servicers to step up the pace of foreclosures in some markets as they put the "robo-signing" controversy behind them.

But foreclosure filings have dropped off dramatically in other markets. The total number of homes subjected to foreclosure-related filings nationwide fell 2.25 percent from the fourth quarter of 2011 to the first quarter of 2012, and 15.9 percent from the same time a year ago.

During the first quarter, a total of 572,928 housing units -- 1 in every 230 -- were subjected to a foreclosure-related filing, either a default notice, scheduled auction or bank repossession. That was the lowest total since the fourth quarter of 2007,  RealtyTrac said in a report earlier this month.

The biggest quarterly decreases in foreclosure activity among the 50 largest metro areas were in Portland, Ore. (down 28 percent), Las Vegas (down 26 percent), Providence, R.I. (down 24 percent), Salt Lake City (down 22 percent), Boston (down 21 percent), and San Jose, Calif. (down 21 percent).

Eight of the top 10 metros with the highest foreclosure rates during the first quarter were in California. Stockton and Modesto topped the list with foreclosure filing rates of 1 in 60 housing units each.

Stockton topped the list despite a 13.3 percent decline in the foreclosure rate from the previous quarter, and an 18.9 percent drop from a year ago. Modesto saw similar improvement, with an 8.14 percent drop in foreclosure activity for the quarter and a 21.48 percent plunge for the year.

Top 10 U.S. metros with highest foreclosure rates, first quarter 2012

Area	Foreclosure rate (First Quarter 2012)
U.S.	1 in 230 housing units
Stockton, Calif.	1 in 60
Modesto, Calif.	1 in 60
Riverside-San Bernardino-Ontario, Calif.	1 in 62
Vallejo-Fairfield, Calif.	1 in 63
Merced, Calif.	1 in 72
Sacramento-Arden Arcade-Roseville, Calif.	1 in 77
Bakersfield, Calif.	1 in 81
Las Vegas-Paradise, Nev.	1 in 82
Phoenix-Mesa-Scottsdale, Ariz.	1 in 87
Visalia-Porterville, Calif.	1 in 89

Riverside-San Bernardino, Calif., topped RealtyTrac's list of foreclosure activity in the nation's 50 largest metros, with 1 in 62 of its housing units in some stage of foreclosure during the first quarter of 2012.

Seven other metros among the nation's 50 largest had foreclosure rates more than twice the national average: Sacramento, Calif. (one in 77 housing units), Las Vegas (one in 82 housing units), Phoenix (one in 87 housing units), Atlanta (one in 90 housing units), Miami (one in 95 housing units), Orlando (one in 101 housing units), and Chicago (one in 107 housing units).

Foreclosure Sales Continue to Plummet

For the second month in a row we've seen a dramatic drop in the number of properties sold at foreclosure, or "trustee sale", auctions. Foreclosure sales in California are down 16.7 percent from February to March 2012 and down 53.1 percent from March a year ago. A total of 86,487 sales were scheduled to occur in California, but of those 80.0 percent postponed, and 10.6 percent were cancelled, leaving just 8,392 that were actually sold. Third parties, typically investors, purchased a record 38.6% of the properties that did sell in California.
Foreclosure starts rose in most states, with the largest increases occurring in Washington, California and Nevada. This, at least temporarily, reverses a downward trend, but even with the increase the volume of new foreclosures remains significantly down year-over-year in all the states we cover.

The increase in foreclosure starts is especially interesting in Nevada. Bank foreclosures came to an almost complete halt there after the passage of Assembly Bill 284, which made significant changes to Nevada's foreclosure laws. The increase this month is directly attributable to new foreclosure starts by Fannie Mae, which is one of very few lenders to have filed any new foreclosures in Nevada since September 2011. Even with the increase by Fannie Mae it is still homeowner associations that are initiating the vast majority of foreclosures in Nevada.