RealtyTrac: Janaury REO Activity Up 12 Percent

“Unfortunately this is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing.”

Foreclosure Activity Down 17 Percent from Year Ago

REO Activity Increases 12 Percent From December

IRVINE, Calif. – Feb. 10, 2011 — RealtyTrac® (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its U.S. Foreclosure Market Report™ for January 2011, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 261,333 U.S. properties in January, a 1 percent increase from the previous month but a 17 percent decrease from January 2010. The report also shows one in every 497 housing units received a foreclosure filing during the month.

“We’ve now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000,” said James J. Saccacio, chief executive officer of RealtyTrac. “Unfortunately this is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing.”

Foreclosure Activity by Type

A total of 75,198 U.S. properties received default notices (NOD, LIS) in January, a 1 percent decrease from the previous month and a 27 percent decrease from January 2010 — the 12th straight month where default notices decreased on a year-over-year basis. January was also the fourth straight month where default notices decreased on a month-over-month basis, giving it the lowest monthly total for default notices since July 2007.

Default notices in states with a non-judicial foreclosure process (NOD) increased less than 1 percent from the previous month but were down 8 percent from January 2010, while default notices in states with a judicial foreclosure process (LIS) decreased 2 percent from December and were down 39 percent from January 2010.

Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 108,002 U.S. properties in January, a 4 percent decrease from the previous month and a 13 percent decrease from January 2010. It was the lowest monthly total for scheduled foreclosure auctions since February 2009.

Scheduled non-judicial foreclosure auctions (NFS) decreased 1 percent from December and were down 3 percent from January 2010, while scheduled judicial foreclosure auctions (NTS) decreased 14 percent from the previous month and were down 39 percent from January 2010.

Lenders foreclosed on 78,133 U.S. properties in January, up 12 percent from the previous month but still down 11 percent from January 2010. Bank repossessions (REO) in non-judicial foreclosure states increased 23 percent from December but were still down 9 percent from January 2010, while bank repossessions in judicial foreclosure states decreased 7 percent from the previous month and were down 16 percent from January 2010. Complete RealtyTrac Report

23 months of housing inventory (actually on the market and shadow inventory)

Inman News
11/22/10

The "shadow inventory" of homes likely to be repossessed by lenders or already in their real estate owned (REO) inventory but not yet on the market reached 2.1 million units in August, up from 1.9 million a year ago, according to the latest analysis by data aggregator CoreLogic.

Because home sales also slowed, the shadow inventory represented eight months of housing supply, up from five months a year ago, CoreLogic said.

Weak demand for housing is "significantly increasing the risk of further price declines in the housing market," said CoreLogic Chief Economist Mark Fleming -- a problem that's exacerbated "by a significant and growing shadow inventory that is likely to persist for some time" because of the length of time it takes loan servicers to liquidate properties.

Combine the 2.1 million "shadow inventory" with the 4.2 million homes that were actually on the market in August, and the total months' supply of unsold homes was 23 months -- about double the 11.6 months the National Association of Realtors estimated in September.

(CoreLogic estimates that the "visible inventory" of 4.2 million homes, which NAR's estimate was based on, represented 15 months of supply.)

A six- to seven-month supply of housing is considered a more normal balance of supply and demand.

CoreLogic estimates shadow inventory -- sometimes called pending supply -- by calculating the number of properties that are seriously delinquent (90 days or more) or in foreclosure that will, in all probability, end up REO.

Although the "roll rates" vary over time, a high percentage of 90-day delinquencies and foreclosures end up in lenders' REO inventories. CoreLogic also counts properties that are already in lenders' REO inventories, but not yet listed on a multiple listing service (MLS), as "shadow inventory."

The size of shadow inventory and its impact on housing markets is subject to much debate, in part because it's not known how quickly lenders will get those homes to market.

But Fleming said there's no escaping the conclusion that shadow inventory will weigh down price appreciation in some markets, and put more downward pressure on falling prices in others.

A large proportion of shadow inventory has not even been foreclosed on yet, Fleming said, and those houses won't enter the market all at once.

"It's not the hurricane hitting the shore, it's just a long and persistent rain, and that dampens the spirit all the way through," Fleming said.

Fannie Mae Offering Deals You Can't Refuse...or so they hope

Welcome to Fannie Mae, Let's Make a Deal

Diana Olick
CNBC Real Estate Reporter
9/23/10

So it seems Fannie Mae is doing all it can to unload its massive quantities of REO inventory.

When I say massive, I mean the 129,310 single family bank-owned properties — or REOs, as they're called — it held at the end of Q2, which is more than twice what it was carrying at the end of Q2 2009.

As I noted in a Tweet yesterday, every time home prices drop just 1 percent, the value of all government-sponsored enterprise (GSE) REOs fall by $287 million (thank you to John Burns of John Burns Real Estate Consulting for that math).

No surprise, then that Fannie would want to get rid of its REO as fast as possible, especially as we saw bank repossessions hit a new record in August and home prices are again weakening. How does Fannie do it? It's renewing an expired program that gives buyers of its REOs "3.5 percent of the final sales price that can be used toward closing cost assistance, including a home warranty."

And if that's not enough, Fannie is now getting those crash-weary real estate agents on its side as well. "Selling agents representing owner-occupants will receive a $1,500 bonus." Nice. The offer runs from Sept. 23, "and must close by December 31, 2010," so this is a pretty short deal.

“We continue to look for ways to stabilize neighborhoods and offer incentives to qualified buyers who will occupy these properties over the long-term and help support their communities," writes Terry Edwards, Executive VP of Fannie's Credit Portfolio Management in the press release.

So let's just do a little more math...in the first half of 2010 Fannie sold around 87,000 REOs.

If it sells half that, because it's three months not six, then Fannie will be paying out a little over $65 million just to real estate agents, not to mention the assistance back to the buyers in the 3.5% back.

I'm thinking Fannie is really worried about rising REO inventory.

Fannie and Freddie's collection of homes reaches 191,000

Fannie and Freddie's collection of homes reaches 191,000

By Nick Timiros
The Wall Street Journal
9/17/10

Two years after they were taken over by the federal government, Fannie Mae and Freddie Mac face a new challenge: The mortgage-finance giants are becoming two of the nation's largest home sellers at a time when the housing market shows new signs of softening.

Fannie and Freddie have already taken back nearly as many homes in the first half of the year as they did all of last year. They owned more than 191,000 homes at the end of June, double the year-earlier total. That number will grow because they are taking back homes faster than they sell them.

In recent weeks, Fannie Mae has warned that it could get tougher on lenders that are taking too long to reclaim homes once they have determined that the home is vacant or once they have exhausted foreclosure alternatives, such as modifications. Mortgage servicers, which collect fees from Fannie, could face fines if the process is unreasonably prolonged.

Fannie's recent reminder to banks signals a growing impatience with delays that have become "exaggerated and unmanageable," says Edward Delgado, a former Wells Fargo and Co. executive who is now chief executive of the Five Star Institute, a provider of training programs for mortgage professionals.

Fannie is effectively saying "we need to jumpstart the system. We need to be more expedient," Mr. Delgado says.

Once they take homes back, Fannie and Freddie must not only cover the utility bills and property taxes, but they are also relying on thousands of real-estate agents and contractors to rehabilitate homes, mow lawns and clean pools. Fannie took a $13 billion charge during the second quarter just on carrying costs for its properties.

While it is expensive for Fannie and Freddie to hold on to more unsold homes, they nevertheless want to avoid costly delays. Attorneys' fees can pile up and vacant homes risk falling further into disrepair. Fannie issued the notice to remind servicers to "minimize processing delays," said a company spokeswoman.

Delays also add to the uncertainty over the housing market, which faces a backlog of loans that are at least 90 days past due or in some stage of foreclosure. Analysts at Barclays estimate that this "shadow inventory" sits at around four million loans.

Already, as borrowers fail to qualify for permanent modifications, newly initiated foreclosures at Fannie and Freddie have risen for three consecutive months to more than 150,000 in July, up nearly 60% from April, according to LPS Applied Analytics.

That creates an increasingly delicate balancing act. The costs of managing those homes are adding up, but the companies are reluctant to slash prices and dump lots of homes at big discounts.

"Freddie Mac probably owns loans on the same street. We don't want to create a downward spiral for values in a given neighborhood," says Chris Bowden, the Freddie executive in charge of selling foreclosures.

Banks are also entering a less favorable environment for disposing of rising inventories. While mortgage rates continue to fall to record lows, home-buying activity stalled earlier this year when tax credits to spur sales expired.

"One year ago, you couldn't even keep them on the market," says Brett Barry, a real-estate agent who sells foreclosed homes for Fannie Mae in Phoenix. "That's so done."

Fannie has reduced the price three times on a property at the end of East Phelps Road in suburban Phoenix, to $200,000 from $265,000 in early July. But, like many of Mr. Barry's bank-owned listings, the three-bedroom home has still received no offers. "They're definitely pushing the envelope on price," he says. "But they're doing it at the wrong time."

A Fannie Mae executive says the company is "very focused on positioning a property effectively" and that after a record-setting June, sales fell sharply in July before rebounding somewhat in August.

"It's difficult. These are volatile markets," says Freddie's Mr. Bowden. "I can easily leave money on the table if I set value too low."

If demand remains weak, Fannie and Freddie could face pressure to take more aggressive steps to hold homes off the market.

Fannie, for example, is testing an effort in Chicago where it will rent vacant foreclosures rather than list them for sale.

Such a "lease-and-hold" approach could make sense in certain markets where "you believe the supply will take a long time to absorb, but there's going to be an increase in employment going forward," says Douglas Duncan, chief economist at Fannie Mae.

But renting could prove tricky for firms that have little experience as property managers.

The companies face other balancing acts. To promote neighborhood stabilization, they have instituted a program that allows offers only from owner-occupants and community groups during the first 15 days that a property is listed. To move sales along, Fannie offers financing on its own properties with just 3% down payments and no mortgage insurance.

Zero Hedge Comments

As the administration continue to recreate the ponzi bubble using the very same criminal methods that reflated the first housing bubble, more and more homes are being handed back to the original mortgage lenders - Fannie and Freddie (which incidentally are all now owned by everyone in America, ever since the GSEs were nationalized by the US, after Barney Frank's experiment in the early 2000s went so wrong, it nearly cost the default of America.

How that human is still allowed to draft law after corrupt and worthless law, is beyond us). And today we discover that at the end of June, Fannie and Freddie are now the proud owners of 191,000 homes (double what they owned at the end of 2009) and rising with each passing day.

And shockingly, the GSEs have decided to do the prudent thing and start selling this real estate, before the plunges really plunge and leave them straddled with millions of homes. On the other hand, this action alone will likely be sufficient to force the next leg lower in home prices.

Banks Continue Playing Extend and Pretend with Foreclosures thanks to Rep. Paul Kanjorski

On March 12, 2009, FASB Chairman Robert Herz was warned by Rep. Paul E. Kanjorski (D-Pa.) and other committee members that Congress would write its own mark-to-market rules if FASB didn't relax them.

Grandpa

The Notice of Defaults (NOD's) number is down only because banks are not sending out NOD's to borrowers who are seriously delinquent. It is in the bank's interest to delay processing mortgage delinquencies courtesy of Representative Paul Kanjorski's crusade for Mark-to-Model (a.k.a. extend and pretend) accounting.

After Kanjorski's cage match victory over FASB, banks assign whatever mark-to-model valuation on their toxic mortgages that best manages their earnings in any given quarter. Foreclosure forces the banks to mark-to-market as the $112,000 Sheriff sale price negates the $180,000+ mark-to-model valuation previously carried on the bank's books. As long as the bank extends and pretends, the $180,000 valuation rules.The Notice of Defaults (NOD's) number is down only because banks are not sending out NOD's to borrowers who are seriously delinquent. It is in the bank's interest to delay processing mortgage delinquencies courtesy of Representative Paul Kanjorski's crusade for Mark-to-Model (a.k.a. extend and pretend) accounting.

Diana Olick
Realty Check
9/16/10

I'm sure you've all seen the headlines from RealtyTrac today that show a new record for bank repossessions.

In some of the news reports today, I've also heard TV anchors make mention of some bright news in the report, that Notices of Defaults (NOD's) are down 30 percent from a year ago.

NOD's are the first stage in the foreclosure process. So that should mean that while there are still a lot of borrowers working through the system, at least the number of newly troubled borrowers entering the system is improving, right?

Wrong.

According to Rick Sharga at RealtyTrac, the NOD number is down only because banks are not sending out NOD's to borrowers who are seriously delinquent.

"We are seeing people in more and more serious stages of delinquency, who in a normal market long ago would have received an initial notice of default or been in the foreclosure process who are not there yet. I do think it is one of the mechanisms that the industry is using to manage supply and demand levels of this distressed inventory to keep the market from melting down."

We already know that banks are managing their owned inventory (REOs) by not flooding the market with all the properties they repossessed. They do this so as not to drive home prices down even further (although it's not really working).

I was really amazed to hear this from Sharga, who points to the bucket of seriously delinquent loans as proof. It keeps getting bigger, while the NODs get smaller.

That doesn't make sense.

Yes, banks are trying to get people into modifications, but we already know those numbers are very small in comparison.

Since I was so skeptical, and happened to also be doing an interview with Doug Duncan, the chief economist over at Fannie Mae, about their National Housing Survey released today, I posed the question to him. He agreed with Sharga.

"The survey shows significant softness on the demand side of the equation, and if you are concerned about the broad based economic effects of significant price declines, if you were to bring large quantities of foreclosed or distressed properties onto the market suddenly, you would definitely put serious downward pressure on prices and that would have broad effects," says Duncan.

He went on to say, "The various parties involved [banks, lenders], either on policy or in executing in the market, are attendant to that and are concerned about the possibility about making the problem greater. My sense is that there is not an attempt to avoid the problem but rather to manage the problem to minimize the damages to both the housing sector and to the economy."

This is why Sharga estimates we will not see a peak in foreclosures until 2011.

Lenders foreclosed on 95,364 U.S. properties in August

June 16, 2009

"I am frantically trying to buy multiple properties right now."

Cramer definitively declares a bottom to the housing market.

"This is patently obvious."

IRVINE, Calif. – Sep. 16, 2010 — RealtyTrac® the leading online marketplace for foreclosure properties, today released its U.S. Foreclosure Market Report™ for August 2010, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 338,836 properties in August, a 4 percent increase from the previous month but a 5 percent decrease from August 2009. One in every 381 U.S. housing units received a foreclosure filing during the month.

“The trend lines of decreasing default notices and increasing bank repossessions converged in August, with virtually the same number of new default notices and bank repossessions for the month — a clear indication that the clogged foreclosure pipeline is being carefully managed on both ends by lenders and servicers,” said James J. Saccacio, chief executive officer of RealtyTrac. “On the front end, seriously delinquent loans are rolling into foreclosure at an unusually slow rate, while on the back end the dammed-up inventory of properties already in foreclosure is moving to REO in steady stream rather than a flood — presumably to prevent further erosion of home prices.”

Foreclosure Activity by Type

A total of 96,469 U.S. properties received default notices (NOD, LIS) in August, a 1 percent decrease from the previous month and a 30 percent decrease from August 2009 — the seventh straight month where default notices have decreased on a year-over-year basis. Default notices peaked in April 2009, when 142,064 were reported nationwide.

Default notices increased on a monthly basis in some states, counter to the national trend. Default notices in California increased on a month-over-month basis for the third month in a row, and New York, Indiana, Ohio and Florida also registered month-over-month increases in default notices.

Lenders foreclosed on 95,364 U.S. properties in August, the highest monthly total in the history of the report and about 2 percent higher than the previous peak of 93,777 bank repossessions (REOs) in May 2010. August REO activity increased 3 percent from the previous month and was up 25 percent from August 2009 — the ninth straight month where REOs have increased on a year-over-year basis.

Five states account for more than 50 percent of national total

California alone accounted for 20 percent of the national total in August, with 69,143 properties receiving a foreclosure filing during the month — a 3 percent increase from the previous month but a 25 percent decrease from August 2009.

Florida accounted for nearly 17 percent of the national total, with 56,877 properties receiving a foreclosure filing — a 10 percent increase from the previous month but a 9 percent decrease from August 2009. Florida default notices were down 46 percent from August 2009 but increased 2 percent from the previous month, ending five straight months of month-over-month decreases in Florida default notices.

Michigan, Illinois and Arizona each accounted for about 5 percent of the national total in August, with 17,764 Michigan properties receiving foreclosure filings, 16,808 Illinois properties receiving foreclosure filings, and 16,510 Arizona properties receiving foreclosure filings.

Other states with foreclosure activity totals among the nation’s 10 highest in August were Georgia (16,366), Texas (14,290), Ohio (13,479), Nevada (13,385), and Washington (6,760). Complete report

Diana Olick recaps recent foreclosure activity for the month of June and REO Inventory

Diana Olick recaps recent foreclosure activity for the month of June and REO Inventory. Bank home repossessions in July clocekd in at 93,000 reflecting a 9% increase over June. Between FHA, Fannie and Freddie, 236,338 homes are in foreclosed inventory. It is estimated that current inventory of foreclosed residential properties among all public and private lenders is just under 600,000 and unfortunately, it is on the rise.

Grandpa

RealtyTrac® (http://www.realtytrac.com/), the leading online marketplace for foreclosure properties, today released its U.S. Foreclosure Market Report™ for July 2010, which shows that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 325,229 properties in July, a nearly 4 percent increase from the previous month but a nearly 10 percent decrease from July 2009. One in every 397 U.S. housing units received a foreclosure filing during the month.

“July marked the 17th consecutive month with a foreclosure activity total exceeding 300,000,” said James J. Saccacio, chief executive officer of RealtyTrac. “Declines in new default notices, which were down on a year-over-year basis for the sixth straight month in July, have been offset by near-record levels of bank repossessions, which increased on a year-over-year basis for the eighth straight month.”

And the U.S. Government continues to throw BILLIONS at housing (an exercise in futility) while placing our grandchildren in financial harms way. The fiscal insanity continues!!