Foreclosure Roulette – A game of extend and pretend

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July 2010 California Foreclosure Report

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Read our latest California Foreclosure Report: DOWNLOAD HERE

Highlights from this report:

Notices of Trustee Sale fell 18.91% back down to expected levels after a 22% spike last monthCancellations drop 13.75%, a reversal of last months trend, but remain up 75.10% year over yearPre-Foreclosure inventory was down 20.18% from June, indicating that lenders may be noticing sales more quicklyDiscounting on the courthouse steps continues to climb since the beginning of the year, up approximately 5% since January to 21.6%Time-to-Foreclosure was down month over month by 3.42% to 226 daysTime-to-Resell fell slightly for 3rd Party investors to 164 days, a 3.53% decline month over month.

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August 2010 Foreclosure Report

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Now covering Arizona, California, Nevada, Oregon & Washington

Starting this month, ForeclosureRadar has expanded coverage to include Arizona, Nevada, Oregon, and Washington. In addition, we now give readers the ability to dynamically drill down to the State, County, City and ZIP Code levels.

“Real estate markets are local, not national, and like other real estate trends foreclosure trends vary a great deal by locationî says Sean OíToole, CEO and Founder of ForeclosureRadar.com. ìWe are excited to be able to bring timely, accurate, in-depth and location specific foreclosure data to the Arizona, California, Nevada, Oregon and Washington markets.”

Arizona
After rising 28.8 percent from June to July, Notices of Trustee Sale dropped 12.2 percent in August. Banks took back more properties at auction than they resold in August leading to a continued climb in inventory of bank owned homes, up 4.79% since last month and 60.48% year over year.
View all Arizona stats by state, county, city or ZIP

California
Notices of Default filings, the first step in the foreclosure process, jumped 16.6 percent in August, the fourth successive increase in as many months. Fewer homeowners found foreclosure relief as foreclosure cancellations dropped 11.2 percent while more homes were lost, up 15.6 percent to 17,841 foreclosure sales.
View all California stats by state, county, city or ZIP

Nevada
After seeing a increase in the average opening bid at auction in July and a drop of sales to 3rd parties, typically investors, opening bids in August dropped by 4.6 percent resulting in sales to 3rd parties increasing by 26.6 percent. Lenders took a record 324 days from the filing of a Notice of Default to completion of the foreclosures sold at auction in August.
View all Nevada stats by state, county, city or ZIP

Oregon
The number of properties scheduled for foreclosure sale rose by 17.1 percent as the number of new Notices of Trustee Sale significantly outpaced the number of foreclosures that were cancelled or sold. While Notice of Trustee Sale filings rose by 9.3 percent, Notices of Default were up 10.7 percent.
View all Oregon stats by state, county, city or ZIP

Washington
Foreclosure activity decreased across the board with Notices of Trustee Sale down 15.8 percent, foreclosure sales down 10.8 percent and foreclosure cancellations down 21.8 percent. Despite the declines, the number of properties scheduled for foreclosure sale rose by 2.7 percent and bank owned inventories rose 9.4 percent.
View all Washington stats by state, county, city or ZIP

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Free Homes? Unlikely. More Foreclosure Delays? Absolutely.

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My phone and email have lit up over the last week as GMAC purportedly halted foreclosures in 23 judicial foreclosure states, and JP Morgan Chase yesterday announced they’d be delaying 56,000 foreclosures. Tonight it appears more lenders may be affected as well. The core issue in both cases appear to be that affidavits were signed by people who did not have personal knowledge of the facts involved despite claiming that they did. Some, however, are making it out to be something much bigger.

The theory behind the “tip-of-the-iceberg” argument is that lenders must produce the original note (loan document) signed by the borrower in order to foreclose, as well as properly recorded transfers of that note from the original lender to the current holder of the note. This seemingly simple task has gotten amazingly complicated over the last decade as loans were securitized and traded among institutions. In an effort to simplify things, lenders created the mortgage electronic registration system (MERS), but even that has been challenged as not meeting the legal requirements for foreclosure. If lenders were actually required to produce the original note and documented chain of ownership before foreclosing the belief under this theory is that foreclosures would largely grind to a halt, past foreclosures would be overturned, and that homeowners might be able to challenge the validity of their mortgage altogether. Free homes for all! Except of course for those who actually paid for them.

Readers of this blog know that I place far more of the blame for this crisis on lenders and government than I do on homeowners. That said, I DO NOT believe paperwork errors should lead to free homes… or frankly even foreclosure delays.

It’s one thing if the paperwork error lead to a lender trying to foreclose on someone who IS making their payments. By all means that person should get their day in court, and the foreclosure should be stopped. But that’s not the argument here. Instead they are saying they should get to stay in their home even though they stopped making their payments and are now legitimately facing foreclosure as a result.

Nothing about that makes sense to me.

While the wild conjecture is entertaining, I remain convinced that these affidavit and chain of custody issues will ultimately be resolved and amount to nothing more than foreclosure delays and a lot of  attorney fees as folks tilt at windmills.

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Beware: New Notice Requirement on Tenant Occupied Foreclosures

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Commencing January 1, 2011, a notice to terminate a residential tenant who remains in the property after a foreclosure sale must include a statutory notice of the tenant’s rights under newly added California Code of Civil Procedure section 1161c passed pursuant to Senate Bill 1149.  This requirement applies to an immediate successor-in-interest involving any residential foreclosure for one year after a foreclosure sale. The code section mandates that the tenant’s rights be must stated on a separate cover sheet or, alternatively, incorporated into the 90 day notice to terminate. The Notice is to state:

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Notice to Any Renters Living At

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September 2010 Foreclosure Report

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Foreclosure Sales & REO Inventories Rise

Foreclosure sales increased throughout our coverage area in September, as did the inventory of Bank Owned properties. A state by state summary for Arizona, California, Nevada, Oregon and Washington can be found below, and you can drill down to view detailed charts at the state, county, city and zip code level using the provided links.

Five major lenders made announcements last week that they would be suspending certain foreclosure activities in various states. These lenders included Ally (GMAC), JPMorgan Chase, Bank of America, Litton and PNC. While this report is primarily focused on September foreclosure activity, it is important to note that we have yet to see any impact to foreclosure sales within our coverage area through Friday, October 8, 2010 by these lenders. This is not completely unexpected as the majority of these announcements were limited to 23 judicial foreclosure states that do not include Arizona, California, Nevada, Oregon or Washington. We will continue to monitor activity by these lenders and post updates to our blog at ForeclosureTruth.com.

“We regularly see lenders make minor mistakes in foreclosure filings” says Sean O’Toole, CEO and Founder of ForeclosureRadar.com. “But the reality is that far more homeowners are behind on their mortgage payments than are even in foreclosure. The clear problem in the housing market today is not foreclosures, but negative equity; and as long as the focus remains on the symptom rather than the disease we will see little progress towards real solutions and this crisis will drag on for years to come.”

Arizona
The inventory of Bank Owned (REO) properties has been steadily rising for the last year in Arizona, up 4.3 percent from August to September, and 67.9 percent year-over-year. This is partially explained by the increase in foreclosure sales that went Back to the Bank, up 3.1 percent from August, and 61.2 percent from the prior year; with a sharper rise in inventory, as REO resales slowed after the expiration of the tax credit. Notice of Trustee Sale filings dropped for the 2nd month in a row, down 8.9 percent in September and 12.5 percent from a year earlier.
View all Arizona stats by state, county, city or ZIP

California
The number of foreclosures Sold to 3rd parties, typically investors, declined 15.6 percent in September. Most foreclosure investors flip the properties they purchase after taking care of title, occupancy and repairs. This process is taking 44.5 percent longer than it did a year ago, up from 95 days to 137. The number of foreclosure sales that went back to the bank was up 4.9 percent, while the total inventory of Bank Owned (REO) properties increased by 5.3 percent as REO resales slowed. Notice of Trustee Sale filinges declined 17.2 percent while Notice of Default filings were essentially flat with a decrease of 1.9 percent.
View all California stats by state, county, city or ZIP

Nevada
Foreclosure sales jumped dramatically in September, increasing by 39.2 percent from August to September. The number of foreclosure sales purchased by 3rd parties was essentially flat with an increase of just 1.1 percent, while the majority went back to the bank, leading to an 8.0 percent increase in the inventory of Bank Owned (REO) properties. Nevada foreclosures filings were mixed with Notices of Default filings down 8.8 percent and Notices of Trustee Sale filings up 6.5 percent in September.
View all Nevada stats by state, county, city or ZIP

Oregon
Foreclosure sales continue to climb in Oregon, up 18.5 percent from August and 88.9 percent from the prior year to a record 967 sales. The vast majority of these sales, 94.3 percent, failed to receive a bid from a 3rd party and went back to the bank as REO inventory to be resold later. Despite a 16.6 percent drop in the number of Notice of Trustee Sale filings, the number of foreclosures scheduled for sale remained flat, increasing just 0.6 percent, as new filings still slightly outpaced the combination of foreclosure sales and cancellations.
View all Oregon stats by state, county, city or ZIP

Washington
A record 2,007 properties were foreclosed on in September in Washington, up 19.0 percent from August, and 55.2 percent from the prior year. Just 7.3 percent of foreclosures sales were purchased by 3rd party investors, with the remaining going back to the bank increasing the inventory of Bank Owned (REO) properties by 10.9 percent. Notice of Trustee Sale filings dropped for the second month, down 15.2 percent from August, but still up 33.9 percent year-over-year.
View all Washington stats by state, county, city or ZIP

StateNotice of DefaultNotice of SaleBack to BankSold to 3rd PartyArizonan/a-8.9%

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Robo-Signing Foreclosure Freeze Update

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Here’s a quick update on the impacts we are seeing from “Robo-Gate”. For those that missed this major foreclosure news item, robo-gate refers to the foreclosure freezes implemented by various lenders after revelations that foreclosure filings were being attested to in a robotic fashion that may not have met legal requirements. In the beginning the freezes were limited primarily to 23 states that use the judicial foreclosure process, but on October 8th the impact grew when Bank of America announced a national foreclosure freeze. You’ll find our initial take, back on October 1st, here: Free Homes? Unlikely. Foreclosure Delays? Absolutely.

Let’s start by saying that by and large it has been business as usual in California and the other non-judicial foreclosure states that we cover: Arizona, Nevada, Oregon and Washington. Foreclosure sales are down, but activity is well within typical ranges with notable exceptions below. Note that we are the only service that has same-day foreclosure sales data for a large service area including 3 of the top 4 foreclosure states. As such we’ve been able to see the impacts of these announcements weeks ahead of any other foreclosure information service in the areas we cover.

We’ve read a number of stories that suggest investors have fled the market and are no longer buying properties at the trustee sales held on the courthouse steps. The numbers say otherwise. Since the beginning of the year investors have purchased an average 20.8 percent of all foreclosure sales in California, and though we did see a drop to 15.5 percent the week following the Bank of America announcement, numbers in that range aren’t unusual. Further, 20.1 percent of foreclosure sales were purchased by investors last week clearly indicating that normal investor activity continues unabated.

Bank of America

As announced Bank of America did halt foreclosure sales starting the week of October 11th in our coverage area. On October 18th Bank of America announced they were lifting the freeze in 23 states, but continuing the freeze in 26 other states. We can confirm that the freeze has continued in our coverage area through today Thursday, November 4th.

More interesting has been conjecture over the impact of the foreclosure freeze on foreclosure filings, including Notices of Default and Notices of Trustee Sale. Bank of America has not only continued with foreclosure filings, but their activity has actually increased as a percentage of total filings each week. For the year they have averaged 11.2 percent of foreclosure filings in California, and between October 11 and October 29 that had increased to 16.9 percent. Similarly, Notice of Trustee Sale filings increased from an average 14.9 percent to 18.2 percent over the same time period.

GMAC

GMAC halted foreclosure sales for one week, from October 11 to October 15th, then returned to business as usual. That same week they also slowed filings of Notice’s of Trustee Sale, but again resumed typical filing volumes after a jump the following week where they made up for the missed filings the week before. Same thing with Notice’s of Default, except a week earlier with a drop in filings the week of October 4.

PNC Bank

While PNC Bank represents a very small portion of foreclosures in our coverage area, they did clearly halt foreclosure activity across the board. Foreclosure sales halted the week of October 11, and filings of foreclosure notices began noticeably dropping the week of October 4.

MERS

Many stories related to robo-gate have discussed the controversy surrounding Mortgage Electronic Registration Systems or MERS. The system originated as a way for mortgages to be traded between parties while avoiding the need to record each transfer, or assignment, with the county recorders office which is a costly and error prone procedure. The failure to record those assignments, however, has led some to question the validity of foreclosures, or even the mortgage itself. Adding to the fire surround MERS, a number of lenders, including JP Morgan Chase, have recently announced they will no longer use the system. The reality, however, is that lenders began abandoning MERS long before now – at least in the foreclosure process. In 2008 8.5 percent of foreclosure sales were held in MERS name, in 2009 that dropped to 4.7 percent, and to date in 2010 it has averaged just 3.0 percent.

And that’s it. We see no other impacts from any other lenders in our coverage area. While Bank of America’s exit will certainly impact total foreclosure sales for October given their size, we don’t believe the decline will be sufficient to have any measurable impact on the housing market in the months to come.

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