Bank of America increased its foreclosure notices an astounding 116% over last month. The resulting foreclosures are scheduled to hit the market in spring of 2012 thus dooming any rally.
Irvine Home Address … 3 PACIFIC Grv Irvine, CA 92602
Resale Home Price …… $799,000
Go on and write me up for 125
Post my face, wanted dead or alive
Take my license n' all that jive
'cause I can't drive 55!
Sammy Hagar — I Can't Drive 55
The housing market is speeding toward another crash. Demand is weak, prices are falling, and to make matters worse, lenders are gearing up to process the shadow inventory waiting to be dumped on the market next year.
Bank of America shifts West Coast foreclosures into overdrive
by JON PRIOR — Tuesday, September 13th, 2011, 7:12 pm
Notice of default filings jumped nearly 70% in California from the previous month, led by renewed activity from Bank of America, according to the data provider ForeclosureRadar.
Foreclosure starts increased in five West Coast states from the previous month: California, Arizona, Washington, Oregon and Nevada.
BofA foreclosure starts more than doubled in August, jumping 116% from the previous month. Wells Fargo and U.S. Bank also showed increases but fell short of the BofA restart, according to ForeclosureRadar, which monitors West Coast states.
“While it can’t be said for every state in the nation, we are seeing continued improvements in foreclosure volumes in many areas of the country, and that is a potential harbinger for housing market recovery,” a BofA spokesperson said. “Strong gains like that from July to August demonstrate our progress – primarily in non-judicial states like California and Nevada – clearing more volume to advance to foreclosure once we pass the numerous, improved quality controls we have in place and only after all other options with homeowners have been exhausted.”
Notice the carefully chosen words. What does it mean to show “continued improvements in foreclosure volumes?” In the past, this has meant delaying the inevitable. Now it means increases the volume of processing. In more colorful terms, BofA is kicking the delinquent mortgage squatters to the curb.
I fully agree with their assessment “that (this) is a potential harbinger for housing market recovery.” I have long maintained foreclosures are essential to the economic recovery. I didn't think anyone believed me. Apparently, many insiders knew this all along and simply wouldn't admit it until now.
The little factoid missing from the BofA statement is that millions of people are going to finally lose their homes to foreclosure. It's about time. And before anyone sheds a tear for the squatters, remember, new families find the houses lost in foreclosure. There are millions of families waiting to buy properties at affordable prices once the foreclosures finally take place.
California foreclosures set to surge
By JON PRIOR — Monday, September 19th, 2011, 11:01 am
California default notices spiked 55% in August, and the number may keep rising in the coming months as mortgage servicers shake off the robo-signing freeze, according to RealtyTrac Senior Vice President Rick Sharga.
In August, servicers filed 28,961 default notices in California, the first stage of the foreclosure process in the state, RealtyTrac showed. Another filing tracker ForeclosureRadar found a similar boost in foreclosure starts along the West Coast and said Bank of America led all major banks with a 116% jump in August alone.
An increase like that does not happen by accident. Someone at BofA made a calculated decision to dramatically increase foreclosures. I have speculated it was a necessary step to raise cash, but only BofA executives know for sure. Regardless of the reason, such a large increase is telegraphing a serious effort to process foreclosures.
Amend, extend, pretend is coming to an end.
“The industry has not yet returned to normal or necessary foreclosure activity levels, but progress is certainly being made,” a BofA spokesperson said.
In an interview with HousingWire, Sharga said gave some idea on where that “necessary” level might be.
“It wouldn't be a stretch to say that we might see NODs in the range of 30,000 per month in California for a few months, but it's difficult to predict that they'd get anywhere near the record levels we saw back in 2009,” Sharga said.
From January 2010 through September 2010, California NODs averaged 28,000 per month. That dropped to 26,000 per month for the rest of 2010 after the robo-signing scandal broke in October, when servicers were found to be signing affidavits en masse and without a proper review of the loan files.
The slowdown continued into the early part of this year, with the NOD average dropping to 22,000 for the first seven months of 2011.
These filings peaked in March 2009 at 58,858 and averaged roughly 42,000 per month that year, the highest average since RealtyTrac began reporting the numbers, Sharga said.
A restarted foreclosure process means prices in California are set for possibly more drops, but the effect will not be seen immediately, according to Michael Simonsen, co-founder and CEO of the data analytics firm Altos Research.
“The price implications for the foreclosure spike are further down the road,” Simonsen said. “August prices did indeed lose their steam from the first half of the year, but it's largely seasonal.”
Analysts expect house prices nationally to double-dip in the winter ahead and finally hit bottom in the spring of next year. JPMorgan Chase analysts long said the fall could be as much as 5%.
It sounds very reasonable to assume prices will bottom in the winter of 2012. Unfortunately, that does not take into account the surge of REO slated to hit the market when the current batch of NODs are processed. If Bank of America is desperate for cash — and it appears to be — then they will not fool around with this group of NODs. They will likely follow with NOTs in 90 days and push these through the auction sites over the winter and spring of 2012.
.
According to the California Association of Realtors, the median home price in the state reached its highest level this year in August to $297,060, though it is still down 7.4% from the year before. Prices could face other challenges such as the expiration of the conforming loan limits in October and the ongoing deficit struggle, CAR said.
With the foreclosure timelines pushed to historic lengths, Simonsen said these properties will begin reaching an already bloated inventory during the height of the selling season of 2012.
“Look for the price impact of newly initiated foreclosures to be seen in the spring of next year, as they add to the spring inventory,” Simonsen said.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
The NODs being filed today are trustee sales in early 2012 and MLS sales beginning next March. BofA undoubtedly timed this move for just that effect. It does them no good to ramp up in the summer and push thousands of home through the process in the winter when there is no seasonal demand, but it makes perfect sense to process NODs now to meet the demand of next spring's selling season. Bank of America is timing these foreclosures to hit the MLS next year.
The liquidation phase of the bubble deflation
Many misguided notions were behind the bear rally of 2009. Government policy makers actually believed they could engineer a bottom ot the housing market through tax incentives, lower interest rates, and relaxed accounting rules. The banks didn't care as long as they were kept alive by the handouts and the higher prices.
The main reason the 2009 rally was not going to be sustained was not due to the economy — although many will blame the economy. The real reason the 2009 rally was doomed before it started was pent-up supply of shadow inventory. I have recently read dismissive accounts of the impact of shadow inventory from an analyst who completely missed the housing bubble. Sometimes I wonder where these analysts think all those houses went. Hiding them in shadow inventory never made them go away.
Each of the next 3 to 5 years, realtors will call the bottom, clueless analysts will agree with them, then both will be surprised when inventory or higher interest rates crush the spring rally. This will happen each year until the overhanging inventory is liquidated and interest rates come up from their temporary cyclical lows.
Remember you read that here.
$345,000 in mortgage equity withdrawal, 16 months squatting
The previous owners of today's featured property paid $520,000 back on 2/14/2001. They used a 400,800 first mortgage, a $80,120 second mortgage, and a 80,080 down payment. With a series of refinancings they ended up with a $650,000 first mortgage and a $175,000 second. They quit paying before April 2010 and squatting until August when the lender took back the property.
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599
sales@idealhomebrokers.com
Irvine House Address … 3 PACIFIC Grv Irvine, CA 92602
Resale House Price …… $799,000
Beds: 3
Baths: 2
Sq. Ft.: 2200
$363/SF
Property Type: Residential, Single Family
Style: Two Level, Modern
Year Built: 2001
Community: Northpark
County: Orange
MLS#: P796555
Source: SoCalMLS
Status: Active
On Redfin: 2 days
——————————————————————————
Luxrious Northpark home built by California Pacific, located on a cul-de-sac in a 24 hour guard-gated community. Interior will have newer paint and carpet. Spacious Family Room with a warm and cozy fireplace. Upstairs consist of 3 bedrooms with a large a spacious master suite, elegant master bath. This wonderful guard-gated community offers pools, tennis courts, sports courts, toddler lots, must see to appreciate this gorgeous home.
——————————————————————————————————————————————-
.jpg)
Proprietary IHB commentary and analysis
Resale Home Price …… $799,000
House Purchase Price … $769,516
House Purchase Date …. 8/12/2011
Net Gain (Loss) ………. ($18,456)
Percent Change ………. -2.4%
Annual Appreciation … 22.8%
Cost of Home Ownership
————————————————-
$799,000 ………. Asking Price
$159,800 ………. 20% Down Conventional
4.18% …………… Mortgage Interest Rate
$639,200 ………. 30-Year Mortgage
$159,997 ………. Income Requirement
$3,118 ………. Monthly Mortgage Payment
$692 ………. Property Tax (@1.04%)
$0 ………. Special Taxes and Levies (Mello Roos)
$166 ………. Homeowners Insurance (@ 0.25%)
$0 ………. Private Mortgage Insurance
$156 ………. Homeowners Association Fees
============================================
$4,133 ………. Monthly Cash Outlays
-$730 ………. Tax Savings (% of Interest and Property Tax)
-$892 ………. Equity Hidden in Payment (Amortization)
$238 ………. Lost Income to Down Payment (net of taxes)
$120 ………. Maintenance and Replacement Reserves
============================================
$2,870 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$7,990 ………. Furnishing and Move In @1%
$7,990 ………. Closing Costs @1%
$6,392 ………… Interest Points @1% of Loan
$159,800 ………. Down Payment
============================================
$182,172 ………. Total Cash Costs
$43,900 ………… Emergency Cash Reserves
============================================
$226,072 ………. Total Savings Needed
——————————————————————————————————————————————————-
MLS Find of the day
A reader emailed me this listing in San Diego with drying marijuana and weighing scale.
My last office in Lake Forest was next to a dispensary before Lake Forest kicked them all out of town. No matter how well ventilated the room, the smell of pot was overpowering even next door. I can only imagine how strong the smell is in that guy's bedroom.
When I first saw these photos I didn't believe it was pot because I didn't think anyone would be able to live with the overwhelming odor of pounds of drying pot, but when I saw the scale, I was convinced. Either this guy runs a dispensary, or he really, really likes to smoke pot — or both.
BoA’s decision to turbocharge foreclosures is so important, it has to have been OK’d by their CEO.
REOs hurting prices and prolonging the bottoming is very market-dependent. Where there are few defaults and underwater loans, you won’t see this effect (the flip side of places not experiencing a bubble).
Ultra-low rates are designed to help the worst hit markets. From what I’ve seen in Florida, a lot of the hardest hit markets are getting a large number of cash buyers – the impact of low rates is lessened. I am not seeing price increases here in NC, but affordability is definitely happening.
MOG, this is merely “The West Coast” states?
Three of the worst hit sand states – Californication, Loss Vegas and Arid-zone-AH — and Washington and Oregon.
Please note that the “AAAHH” in AZ is absolutely NOT caused by moving here from “a farm house” in Sand Diego!
IHB, we are being told every single month in Phoenix that the huge decline in “listed inventory” AND in listed REOs AND the decline in NODs is absolute proof that The End is Near!!!
According to Calculated Risk and Lawler, the decline in listings has occurred in almost every city in the U.S. And, this week Bill@Cr shows U.S. that the “Re-modelling Index” is at an all time high. Does this suggest that many of U.S. are NOT going to sell out at these depressed prices, and ARE gonna fix it up, and stay around for a while?
So, where DID BoA find “double” the number of homes to foreclose? You suggest its the homes of the “marginal cost renters”. Might be!
But still, after more than 3 years of huge numbers of foreclosures in Cal, Nev and Az, BoA can still DOUBLE the number of NODs?
Absolutely Astounding – and, yes, we are now thinking about attending AA – is it not.
It’s called cannabis, not pot, neo-cons call cannabis pot, those brain-washed by the system.
Legalize freedom. God has given every person the right to choose their medication and what they put into thier own bodies. The War on Drugs has caused more harm to this country than slavery, and anyone who says they love freedom cannot support the drug war and not be a hypocrite.
I guess Lincoln, Einstein, and Jefferson were out of their minds when they warned us of this government intrusion.
I’m sure most of you LOVE the smell of brewing coffee (a drug), having a beer (a drug), smoking a cigarette (drug), and downing your scripts to feel better. I’d rather deal with people using cannabis ANY DAY rather than some obnoxious person on alcohol.
P.S. There are many co-ops in Lake Forest to this day, a few in Irvine, and even neo-con Costa Misery. Remember, it is LAW now Prop 215. I hope it gets legalized for everyone next year. Where is the Tea Party on this freedom? Oh yea, that’s right, more hypocrites.
Off the housing topic, don’t you think? So you compare having a beer to that of having to deal with offensive pot smoke in public and/or your own home. And, you do it in God’s name. LOL.
Looks like we have found an underwater, heloc abuser in this poster. The intelligience matches the profile.
Intelligence…really? You want to go there…ok I test between 131-135, nultiple tests, over the last 30 years…how about you?
Yes, people use cannabis in God’s name, He did create it after all.
HELOC abuser? LOL, you flat out lie. I’m one that put down 20%.
Fail fail fail. Keep posting, I love when people expound upon that which they are ignorant. Let me guess…you vote republican?
Swiller: I agree. The “War on Drugs” was created to fool us into thinking “They” care when in fact a huge amount of People make a living from it including the DEA, Judges, Lawyers etc. I don’t do any kind of Drug or Drink, but let’s face it, those that do aren’t allowed to enjoy a Spliff but can buy a Bottle of Scotch at Ralphs, drink as much as they like and are then able to jump into a vehicle and kill someone.
But back to the subject of Housing – I’m from the UK and have never been able to understand why “Spring/Summer is selling season” here in the OC, is it because of all the snow we get in the winter that makes it difficult to drive around shopping for Houses? Why is it harder to sell or buy a House here in the Autumn or Winter months?
I’m sure there must be a good reason.
I think it is because of school schedules. Parents don’t want to move to new school districts in the middle of the school year. Spring/Summer purchases allow moves between school years. Plus, people may be a bit cash poor during the holidays.
Funny “MLS Find of the Day”. Kind of hard to tell, but I do believe the last photo shows some live plants growing in the “lush” backyard. It could be grown for medical reasons though. 🙂
And photo 11 has what could be bong’s sitting on the window ledge.
$800k for a house literally on Culver?
good luck with that!
Since when did the law mean anything in Kalifornia?
Has anybody noticed the significant drop in asking price and sale price of houses in Newport Coast. The high-end is finally catching up with the decline in a very big way.
I am amazed by people who still pay top dollar for the house in Irvine when there is a better product out there.
This is the begining of capitualation from the banks and will lead to capitulation from sellers at the ‘high end’. Anything North of 800K is hopelessly out of touch in the ‘ask’ pricing. There just isn’t the income or savings to pay for soooooo much of this stuff.
This will cause compression of everything lower. And worst of all??? If you believe that interest rates on a 30 year fixed won’t be double what we have here in the next decade you are delusional… this will kill all real appreciation for as far as we can see… If rates are this low in 10 years…OMG – the country will still be in near depression. This will be Japan. RE worth less 25 years later than it is today.
My .02
B
A friend of mine put in a $1.6M bid on a short sale over a year ago but BofA rejected it. A couple months ago they contacted him about his interest now…he re-offered a lower $1.4M and BofA accepted it.
should’ve offered $1.3M
That’s STILL way too much to spend on any house. Whaddafewl…
A note fixed to a neighbor’s door said the townhome was going to auction next week. It listed the original NOD date of 8/07. We noticed the lady living there was moving some boxes to her car over the weekend, so maybe this time it’s for real. 3+ years of squatting, though, not bad.
Trying to recall if it was BoA letterhead.
A NOD does not necessary meaning a timely FC. Do the banks need to file a NOD to keep the non-performing loan active, i.e. to avoiding implied approval of a forgiven loan? If no NOD were made after x years would the court consider the loan paid or void?
I’ll beleive it when the houses goes to FC. Remember all the NOD for NPB that have been going on for years with actually FC’ing.
NPB house hunters are different from Irvine house hunters. RE in NPB is much better looking than Irvine’s RE. The Irvine HH are generally put more value on the schools and closeness to speciality food shopping.
Government policy makers actually believed they could engineer a bottom ot the housing market through tax incentives, lower interest rates, and relaxed accounting rules.
Dude, you’re always saying stuff like this, but do you really believe it?
I think it was just more “extend and pretend”. The government simply applied the brakes a little bit. Sure, some money was wasted then, but in the long run more money was saved.
Think about the amount of tax revenue lost for the program, then think about how it will have bumped the market up for about 3 years. That’s 3 years of inflation eating away at the debt overhead. That’s real money being saved by the financial institutions. Now, that’s how you do a bailout.
Pisses me off because I want to buy a home, but it was still a good idea from a macroeconomic point of view.
The thing that I’m really dumbfounded on is how so many buyers took the bait in California. I mean spending over 1/2 million dollars for an $8,000 credit? Really? Well, thanks for the bailout I guess.
Excuse me, $18,000 including federal and state. But, still.
I believe that they believed they could engineer a bottom.
I also believe the policies enacted were very wasteful. We would have been better served nationalizing the banks, recapitalizing them, and letting house prices find a natural bottom. Once we failed to allow the too-big-to-fail to fail, we were forced to go down this path to keep them on life support.
Here’s an article on strategic default:
http://www.foxbusiness.com/industries/2011/09/19/new-face-foreclosure-strategic-defaults/
And here’s the mortgage industry commenting on the article and basically asking, “How dare borrowers default!?!”:
http://www.housingwire.com/2011/09/20/the-new-slap-in-the-face-of-foreclosure?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+housingwire/uOVI+(HousingWire)
I am going to use those in an upcoming post. Thanks.
Courageous to forecast home prices in the spring! Consider this: the banks built shadow inventory, and did not speed foreclosure. Conclusion drawn: they were to be rescued by something that would save them, but what? a) inflation b )population growth c)weak dollar d) incredibly lower interest rates on homes.
And a few other gambits. All failed to some extent, although these steps did make the collapse a fraction of what it would have been (total chaos and depression, probably). The FED is not done yet, they are trying STILL to lower rates artificially, and thus, to keep trying the same steps until they work: the most important is to drop the 30 year rate on mortgages to say, two and a half percent in the spring. They might succeed, and they might also let investors use the same banking system of fha to buy distressed properties and juice it further. Not so farfetched, so the real issue for Spring 2012, what’s the 30-year rate going to be when the FED gets done? Higher? unlikely. Lower? almost certainly, no matter how ridiculous that sounds.
If the PTB want a reelection, the news will be 90% positive or with a positive spin. They will print all the news that they want you to have. If they want BHO, there will be a big push for a stimulus boost to occur before the elections.
It looks as if BHO is out by the news spin, but that may change with the Republirat canidate. For the economy, does it really matter? Both are like drunken sailors on shore leave.