Some lenders may be increasing the rate of foreclosures, but overall, the time it's taking banks to foreclose is increasing. The foreclosure time now stands at a record 631 days.
Home Address … 1114 SCHOLARSHIP Irvine, CA 92612
Asking Price ……. $243,000
It's forever, this time I know
and there's no doubt in my mind
Forever, until my life is thru,
house I'll be livin' in you forever
Kiss — Forever
Foreclosures don't take forever, but they certainly do take a very long time. Foreclosure used to be a deterrent to prevent borrowers from becoming delinquent on their loans. Now that the process takes so long, the prospect of two years of free housing is actually becoming an inducement for strategic default.
Average Foreclosure Time Sets New Record
Published: Thursday, 1 Dec 2011 — 9:30 AM ET
By: Diana Olick
CNBC Real Estate Reporter
Foreclosures are setting new records again, this time not in their overall numbers, but in the time it is taking for all of these properties to be processed through the legal system. The average loan in foreclosure has now been delinquent a record 631 days, according to a new report from Florida-based Lender Processing Services.
631 days. That is quickly approaching two years. The process is supposed to take about six months, not two years. How many people have been induced to strategically default because the know they can get two years of free housing? Why would anyone struggle if they know the rewards for not paying?
The after effects of the so-called “robo-signing” foreclosure paperwork scandal, now more than a year old, continue to plague states which require these cases to go before a judge.
The differences in processing times are blatant when you compare judicial versus non-judicial states. Non-judicial state foreclosures inventories are less than half those of judicial states, and foreclosure sale rates in non-judicial states are four to five times that of judicial states.
Judges are starting to ramp up the process.
That's good to hear. If the paperwork is in order, the process should go forward unimpeded.
Bank repossessions actually surged in October in many judicial states, up 48 percent in New Jersey and up 73 percent in Indiana month-to-month, according to RealtyTrac. Still the backlog is still enormous. Overall foreclosure inventory is at an all-time high, 4.29 percent of all active loans, according to LPS.
“The discrepancy will go on in perpetuity, as there always has been a difference between judicial and non-judicial timelines,” said Kyle Lundstedt, managing director of LPS Applied Analytics. “Even prior to the worst of the crisis, loans were 4-5 months more delinquent in judicial states at time of foreclosure sale. The number today is more like 8 months, but will return to the 4-5 month difference depending on when and how fast foreclosure sales occur.
A record-high inventory of foreclosures in process does not bode well for the near future of the housing recovery. All those distressed properties will sell at a deep discount, likely bringing down the prices of surrounding homes.
Remember how real estate bulls used to claim the shadow inventory predictions were doom and gloom? Well, we are about to find out because this inventory is working its way out of the shadows and on to the MLS. All the predictions of the housing bears will come true.
They will also add to already historically high existing home inventories, while demand is still weak. While there is considerable investor demand for distressed properties, new foreclosures are still outnumbering foreclosure sales by over 3:1. In addition to the “robo-signing” delays, we are now beginning to see the effects of ineffective loan modifications.
Loan modifications were always a delaying tactic. Banks kicked the can down the road, but now we are back at the can again. Will banks try to kick it again and permit more squatting?
Repeat foreclosures made up nearly 45 percent of new foreclosures in October. Of the 2.1 million modifications since the start of 2008 more than 10 percent were in foreclosure with another 27.4 percent delinquent 30 or more days, as of the end of the third quarter of this year, according to the Office of the Comptroller of the Currency.
I don't see how loan modification programs can be viewed as anything other than a complete and total failure.
Lundstedt said foreclosure moratoria, process/documentation reviews, evaluation for loss mitigation and bankruptcies make up the rest of the repeat foreclosures.
As the mortgage market continues to work through the backlog of troubled loans, looking forward, loans originated in 2010 and 2011 are now the best performers on record, thanks to tighter credit requirements.
Of course that begs the question: Did the pendulum swing farther than necessary to the conservative side? Is underwriting now unnecessarily restrictive?
No, it hasn't. Loan standards haven't gotten strict enough until new loans stop going bad. Loan standards are designed to weed out those people who will default and fail to pay back their loans. Until loan standards accomplish their primary function, they have not become strict enough.
45% off the peak and more to go
Sometimes when I see what people paid at the peak, it really takes my breath away. This tiny one bedroom one bath condo sold for $417,000 at a time of 6.5% interest rates. The cost of ownership would have been nearly $3,500 per month for a shoebox.
Even at today's prices, this unit still isn't a bargain. The $1,480 cost of ownership is still above rental parity, and condos like this one should carry a significant discount to rental parity to attract an owner. Why else would you live here if not to save significantly over rent? To capture that rapid appreciation, right? Well, we all know that isn't going to happen.
I expect prices on these units to fall further. Perhaps in the sub $200,000 range, they may find some willing owners, assuming interest rates stay near 4%.
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This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599
sales@idealhomebrokers.com
Home Address … 1114 SCHOLARSHIP Irvine, CA 92612
Asking Price ……. $243,000
Beds: 1
Baths: 1
Sq. Ft.: 725
$335/SF
Property Type: Residential, Condominium
Style: One Level, Other
Year Built: 2006
Community: Airport Area
County: Orange
MLS#: P804669
Source: CRMLS
Status: Active
On Redfin: 2 days
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Subject is a lower unit condominium featuring new interior paint, new carpet, granite counters and a private patio. HOA offers a community pool, spa, fitness center, meeting rooms, clubhouse and media room. Located near the 405 Freeway and John Wayne Airport.
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Proprietary commentary and analysis 
Asking Price ……. $243,000
Purchase Price … $417,000
Purchase Date …. 7/17/2006
Net Gain (Loss) ………. ($188,580)
Percent Change ………. -45.2%
Annual Appreciation … -9.7%
Cost of Home Ownership
————————————————-
$243,000 ………. Asking Price
$8,505 ………. 3.5% Down FHA Financing
4.02% …………… Mortgage Interest Rate
$234,495 ………. 30-Year Mortgage
$74,675 ………. Income Requirement
$1,122 ………. Monthly Mortgage Payment
$211 ………. Property Tax (@1.04%)
$0 ………. Special Taxes and Levies (Mello Roos)
$51 ………. Homeowners Insurance (@ 0.25%)
$270 ………. Private Mortgage Insurance
$276 ………. Homeowners Association Fees
============================================
$1,929 ………. Monthly Cash Outlays
-$174 ………. Tax Savings (% of Interest and Property Tax)
-$337 ………. Equity Hidden in Payment (Amortization)
$12 ………. Lost Income to Down Payment (net of taxes)
$50 ………. Maintenance and Replacement Reserves
============================================
$1,480 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$2,430 ………. Furnishing and Move In @1%
$2,430 ………. Closing Costs @1%
$2,345 ………. Interest Points
$8,505 ………. Down Payment
============================================
$15,710 ………. Total Cash Costs
$22,600 ………… Emergency Cash Reserves
============================================
$38,310 ………. Total Savings Needed
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Since it’s taking so long for the lenders to kick out deadbeat loanowners, the name of this post should be FOREVER-CLOSURE.
If fact, you should poll delinquent loan-owners (let’s say, over 700 days) and devote an entire thread to their stories of limbo, hopes,despair, and happiness.
They could talk about how they were victimized, led astray and run amok, when in reality all they did was game the system and hit the ghetto lottery.
The thread could generate a record-setting number of astute observations from angry renters, and bragadocious borrowers.
Surely some observers would moralize about the pending destruction of our collective ethics, while others would go on about how banks were the devil or they could now afford to get Timmie that much-needed organ transplant.
Or it could be a major yawn, because as B.B. King once sang, “That’s a story everybody knows”.
Are you still in the house? How long has it been (or how long did you get?)
I don’t think CWAs implication that everyone who walks away from their house had a crazy sob story to tell. Most people who have discussed their situation on this blog have kept it pretty factual and I have not seen many (if any) victimized sob stories. I think most people who walked away just looked 5 years ahead and thought about whether they would be better off walking now or sticking it out (if even an option) for the next several years.
As far as anecdotal information goes, I made my last payment on 8/1/2008 and the trustee sale was on 6/12/09. The original purchase price was $512,000 and the sale price at auction was $212,000. We rented for a little over 2 years for $2000 less than the mortgage ($1550 compared to $3500) and bought another house in August of this year (30 year fixed at 4.25%). We feel very fortunate to be back in a house and have been quite humbled by the past few years. I would have to think this is a more prevalent feeling from those who have walked away in the past few years than feelings of victimization and bragadociousness.
Did you use an FHA loan? Were you precluded from using a Fannie/Freddie loan because 5-7 years hadn’t elapsed? Were you required to prove the foreclosure was due to some hardship?
VA loan. I believe we would not have been eligible for any other program because the minimum is 3 years post foreclosure. If the house we were foreclosed on was bought with a VA loan it would have probably disqualified us as well but fortunately it wasn’t. The only requirements were income and credit. We both had to have credit scores above 660 (I think) and we did. I was suprised to see that mine was 670 and my wife’s was 690 only two years after the foreclosure. We only had the cars as debt and even though we could have paid them off, we didn’t solely to reestablish a decent credit score. I guess all of the rumors out there about how a foreclosure will trash your credit score are exaggerated. I’m not sure what the income requirements were but when the loan officer (who was great, IMO) asked me how much I wanted to borrow I told him no more than $350,000 and he said we easily qualfied for that amount. We ended up borrowing $290,000 and ended up with a PITI of ~ $1850. It really makes a big difference when you are in a low tax rate area with no special assessments.
Good for you Partyboy, thanks for sharing your story. My good friend hasn’t made a payment since November of 2010 and is still in his house. He bought in 2005 with little down and has not received any loan mods due to his negative equity position. He thinks it will be the end of the world when the day comes when he is forced out of the house. Like you said, rent for two years and then buy again if you choose.
Actually, I thought it would be interesting to hear a series of personal experiences that would run the gamut from disgustingly predatory, to heartwrenchingly tragic, to utterly hilarious.
Naw.
I hit the bricks, flew the coop, and got the hell outta dodge…
My new crib is paid off, mortgage-free in a nicer part of town where they are building 500 boat slips right on the lake.
I has been over 2 years since I last paid, but technically it’s been 26 months and counting since the bank has not yet foreclosed.
I may just short sale, or do nothing I really don’t care since my credit is shot anyway.
Were all squatters, bankers, and lobbyists – being nothing more than bags of misallocated carbon – to be ground up and used for fertilizer, it would grant some infra dig satisfaction to decent people, but quickly become a mundane footnote in the history of this mess.
Yawn.
NICE granate…
To me, a big problem with this is that it is a lower floor unit. That alone is a 20K discount that granate can’t solve. Top floor is always best becuase I hate hearing people walking above me. Less than 800 sq ft, maybe OK for Tokyo.
granite*
A close friend of ours owns at Ave1, and she was involved in an HOA action and private lawsuit fighting a lower unit owner’s complaints that their walking on wood floors cause excessive noise for him.
Fun!
HOA action and private lawsuit? That’s a rarity ;)Right down there with “special assessment”.
Despite a lot of foreclosure and short sale activity in our neighborhood, the master HOA’s finances are on track and the sub HOA’s reserves have grown too large. Our sub HOA dues were lowered a few dollars for 2012 as a result.
Analyst: Calif. birth rate a 24-year low
Published on December 8th, 2011
http://lansner.ocregister.com/2011/12/08/analyst-calif-birth-rate-a-24-year-low/155242/
The low birth rate just reinforces that there’s no light at the end of the tunnel for California RE shills.
The OC Register has another interesting link with some RE stats:
O.C. median home price slumps 6% (DataQuick)
Halfway there to national RE pricing! 🙂