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The Foreclosure Report – January 2012

By Mike Daniel  |  Feb 14, 2012  |  3 Comments
Categories: foreclosure report

Trustee Sale Investors Kickoff the New Year with Near Record Activity

Real Estate investors started off 2012 with a bang. Sales to Third Parties, typically investors rose significantly in January throughout our coverage area, with the exception of Washington. California saw the most activity, with investors purchasing 3,964 properties for $766.2 million. Note that trustee sale investors must pay in cash, in full, with no title insurance or inspections prior to purchase. This is the fourth largest month on record in California, and the busiest since March of 2011.

Nevada saw the largest month-over-month increase in Foreclosure Sales, with investors there purchasing 973 properties for $99.1 million. This increase, coupled with the dramatic decline in new foreclosures that began in October 2011, is quickly depleting the foreclosure inventory that remains scheduled for sale in Nevada. Year-over-year the number of Nevada properties scheduled for sale has dropped 57.6 percent.

Despite what appears to be significant percentage increases in Foreclosure Starts in California, Nevada and Washington, these increases barely offset the declines seen over the holidays. Compared to January one year ago, Foreclosure Starts are significantly lower now – despite the fact that many banks were still under self-imposed moratoriums due to robo-signing last year.

“January’s numbers should put to rest any notion that we will see a wave of foreclosures in 2012, at least in the western states that we cover.” Stated Sean O’Toole, Founder & CEO of ForeclosureRadar. “Foreclosure Starts remain near record low levels, significantly lower than a year ago, when many banks still had self-imposed moratoriums in place due to the robo-signing scandal. Add to that a foreclosure timeframe of more than 8 months, and there is little chance of a wave this year even if all the banks started the foreclosure process en masse tomorrow.”

CLICK HERE for our complete January 2012 Foreclosure Report

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The Foreclosure Report – December 2011

By Mike Daniel  |  Jan 12, 2012  |  7 Comments
Categories: foreclosure report

2011 Foreclosure Activity Ends With a Whimper

Foreclosure Starts dropped significantly throughout our coverage area with the exception of a modest increase in Oregon. Foreclosure Sales were mixed, and down far less than we expected given lender announcements of holiday moratoriums. California and Washington actually saw modest increases. Also surprising was a drop in the time to foreclose across most states, since foreclosures typically get extended over the holidays.

An event of particular note this month was an unexpected spike in the Cancellations of foreclosure in California, with an increase of 45.8 percent from the prior month. Almost the entire increase occurred in Los Angeles County where over 5,000 sales were cancelled. This looks to have been caused by a city ordinance eliminating the trustee sale location in Norwalk. We expect many of the cancelled sale dates to be reissued at a new location within the county soon.

Nevada’s new foreclosure law, which caused Foreclosure Starts to plummet in October, are now impacting Foreclosure Sales as well. We’ve seen foreclosure activity bounce back after lenders deal with state law changes in the past, but its less clear that we’ll see such a recovery in Nevada anytime soon.

“Nevada’s new foreclosure rules appear on track to bring a near complete halt to foreclosures in that state.” stated Sean O’Toole, Founder and CEO of ForeclosureRadar. “In the near term this will certainly help homeowners who were facing foreclosure, eviction, and potentially deficiency judgements. Longer term, we believe there will be unintended consequences for the state as business declines for the many real estate related companies that would normally service, resell and finance those foreclosures. While we hope the rules will lead to better lender accountability as intended, we fear that they will instead lead to higher unemployment and less certainty as to when the cloud of ‘shadow’ inventory hanging over the state will be lifted.”

CLICK HERE for our complete December 2011 Foreclosure Report

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FHA Keeps Funding Flips, Investors and Buyers Rejoice

By Mike Daniel  |  Dec 28, 2011  |  3 Comments
Categories: FHA

In a move that will undoubtedly make investors stand up and cheer, the Department of Housing and Urban Development (HUD) announced today that the Federal Housing Administration is extending a temporary waiver of its “anti-flipping” rule. The waiver is a boon for investors who rely on rehabbing and selling properties in a short timeframe, and homeowners who rely on FHA-insured financing to buy.

The pool of buyers who rely on FHA dramatically increases the investors’ ability to quickly sell. FHA research finds that in today’s market, it takes a real estate investor less than 90 days to acquire, rehab, and sell a property. Before the initial waiver in February 2010, FHA did not allow potential buyers to purchase properties that had previously been purchased within the last 90 days to protect its mutual mortgage program from losses on homes that were not rehabbed, but flipped at inflated prices.

The waiver is subject to certain restrictions, including that transactions must be at arms-length, meaning that the deal must be made between separate parties who would not gain from the buying or selling of the property.

The waiver was set to expire on January 31, but now will be in effect through December 31, 2012.

This is great news for the thousands of potential homeowners who are first-time buyers or those who lack the down payment required on a conventional loan, as well as real estate investors that have built a business around rehabbing properties and selling to FHA borrowers.

As investors, how much of your business in 2011 has come directly from this waiver? We’d love to hear how this has helped your business.

3 Comments

The Foreclosure Report – November 2011

By Mike Daniel  |  Dec 12, 2011  |  1 Comment
Categories: foreclosure report

Foreclosure Sales Slow for the Holidays, While Lenders Prepare for 2012

It is not unusual to see foreclosures slow for the holidays, and the this year is no exception. Foreclosure starts were up slightly in Nevada and Washington, but the increases were insignificant given the recent declines in those states due to legislative changes and legal challenges. Foreclosure Sales rose only in Arizona, but that increase simply offset the drop seen in October and is still well below average monthly sales for the year there.

Notice of Trustee Sale filings rose 34.7 percent from October to November in California. The increase came primarily from filings by Bank of America, up 52 percent, and Wells Fargo, up 23 percent. It is not unusual to see an increase in foreclosure sales each January, and these filings would be necessary in preparation for that.

Sales to 3rd parties, typically investors, have increased significantly year-over-year. The largest increases we’re seen in Arizona and Nevada at 101.6 and 79.9 percent respectively. Other states saw increases as well: California 29.4 percent and Washington at 6.7 percent.

“It’s great to see the banks slow down foreclosures and evictions for the holidays.” stated Sean O’Toole, Founder and CEO of ForclosureRadar. “We expect that the numbers will drop even further in December. Come January, it will be back to business with at least a small surge as banks play catch up after the delays.”

CLICK HERE for our complete November 2011 Foreclosure Report

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The Foreclosure Report – October 2011

By Mike Daniel  |  Nov 15, 2011  |  0 Comments
Categories: foreclosure report

Little Change in California, as Nevada and Washington Foreclosure Starts Plummet

Foreclosure Starts in California were little changed this month, after a dramatic increase in August and subsequent fall in September. Other California foreclosure activity was also little changed in October. California foreclosure investors gained traction with 9.9 percent more properties sold to third parties in October, representing a record 28.8 percent of all foreclosure sales. A year ago just 16.9 percent of foreclosures were purchased by third parties.

Nevada Foreclosure Starts plummeted in reaction to the passing of AB 284, which imposed stricter requirements on filing new Notices of Default, and seems to have specifically targeted ReconTrust – the trustee that handles all Bank of America and Countrywide foreclosures – by prohibiting a trustee from being owned by the foreclosing lender, as ReconTrust is. Washington Foreclosure Starts continued their decline after being impacted by a lawsuit filed by the State Attorney General against ReconTrust in August alleging the trustee was illegally foreclosing on properties in that state.

Elsewhere, Arizona foreclosure starts are at the lowest levels since spring of 2009, with just 6,133 Notice of Sale filings in October. This is seen throughout the state, as cancellations, properties sold to the bank and those sold to third parties are all down. Oregon Foreclosure Starts continue their drop from the April spike, down 20.6 percent in October.

“I find it amazing that so many believe that legislation and lawsuits targeting the foreclosure process are a win for homeowners.” stated Sean O’Toole, Founder and CEO of ForeclosureRadar. “The reality is these delays help the banks by allowing them to keep bad loans on their books at inflated values, while leaving in limbo the millions of homeowners that are already in default. The housing market will not recover until we move beyond these delay tactics.”

CLICK HERE for our complete October 2011 Foreclosure Report

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Protecting Our Protectors: Mortgages and the Servicemembers Civil Relief Act

By Mike Daniel  |  Oct 27, 2011  |  2 Comments
Categories: advice, buy at auction, foreclosure laws, preforeclosures, purchase at auction

Active military service can be very difficult financially for the men and women who serve, and the family members they leave behind. The stress of knowing your loved one is potentially in harms way is enough of a burden, without having to worry about loss of income and unpaid debts that sometimes are a part of being called to active duty. Fortunately there is a law to protect those actively serving from debt collection, and foreclosure. Unfortunately many people are unaware of the law and the rights it provides servicemembers, and the issues it can raise for others, including foreclosure investors.

­­­The Service Members Civil Relief Act (SCRA) of 2003 provides a wide range of protection for service members. It is intended to postpone or suspend certain civil obligations to allow service members the ability to devote full attention to their duties without creating additional stress on themselves and their families.

With regard to foreclosure, the law states that a lender who made a mortgage prior to the service members active service may not foreclose during, or within 90 days after, their active service unless ordered by a court or agreed to by the service member. Also note, SCRA only applies to active service members who are the principal homeowners. There is an amendment, H.R. 1263 which intends to amend the law to allow spouses similar protections.

Recently, the Justice Department reached a settlement in excess of $22 million with Bank of America and Morgan Stanley for SCRA violations due to wrongful foreclosing o active service members. Note that lenders don’t necessarily have anyway of knowing that someone is actively serving. As such, it is important to note that service members should proactively inform their lender of their rights, if for no other reason then to avoid the hassles of having the foreclosure overturned. And investors need to realize that lenders will make mistakes and wrongfully foreclose on occasion.

If you buy a property where the borrower is actively serving our country, we recommend that you do what you can to help the family, and work with them to have the sale rescinded as quickly as possible so that you can get your money back and move on to other deals. But also be aware that we’ve seen cases where homeowners have made false claims about serving to the lender, which resulted in an overturned sale and a lost opportunity for the investor. Knowing the law may also help you avoid the same fate.

Have you known someone who has been affected by SCRA?

2 Comments

The HOME Act: Taking from Your Nest Egg to Save the Nest?

By Mike Daniel  |  Oct 13, 2011  |  1 Comment
Categories: 401(k), foreclosure laws

Under a bill proposed last week in Congress, those far behind on their mortgage can withdraw from their 401(k) to save their home – without any penalties.

According to the language in the HOME Act, the proposed bill allows a taxpayer to withdraw money from a qualified retirement plan penalty free – but not tax free – to make mortgage payments toward his primary residence with a lifetime cap of $50,000 or one-half of the present value of one’s 401(k) account (whichever is smaller), so long as those funds are used for that purpose within 120 days of withdrawal. This sounds like a great idea that could potentially help millions of homeowners that are behind on their payments or struggling with a recent job loss get back on their feet, right?

But who does this really help?

To me, this sounds like another example of trading tomorrow for today that will do little to ultimately help the millions who are hopelessly underwater, and who will eventually lose their home anyway. Is this bill really about helping the millions of American’s facing impending foreclosure? Or is the harsh reality that this is another bank bailout that we’ll end up paying for when these folks need help because they haven’t saved enough for retirement.

What do you think? Is this more of the same? Or finally a piece of legislation that can change the fortunes of those who choose to rob their future for the present?

1 Comment

The Foreclosure Report – September 2011

By Mike Daniel  |  Oct 11, 2011  |  2 Comments
Categories: analysis, foreclosure report, third party, Trustee Sale

After Big Jump in August, Foreclosure Starts Fall Again

After a significant jump in foreclosure starts in August, driven primarily by Bank of America, foreclosure starts returned to levels in line with prior months, far below the numbers reached at the peak.  California has seen a drop in activity of 56 percent since its peak, from 58,623 Notice of Default filings in March of 2009 to 25,778 today.  Arizona shows a similar swing in Notice of Trustee Sale filings, from 14,722 in March of 2009 to 5,982 filings last month – a decrease of 59.4 percent.  Washington shows the greatest decrease of all, with 71.5 percent less Notice of Trustee Sale filings today than at their peak in June of 2009.

Foreclosure sales were mixed this month, with declines in Arizona, California and Nevada, while Oregon and Washington both showed increases.  Despite the declines, the percentage purchased by third parties, typically investors, was at or near peak levels.  In California, third parties made up a record 27.4 percent of all sales last month. In Arizona, that number was even higher at 38.3 percent, also a record.  Nevada was just shy of their record, set in August at 29.1 percent.  Sales to third parties was up Washington was up 15.6 percent, a record for this year.  Oregon was the only state to to show a decrease, down from 15.5 percent in July to 6.0 percent today.

CLICK HERE for our complete September 2011 Foreclosure Report

2 Comments

Foreclosure is the Cure. Not the Disease.

By Mike Daniel  |  Oct 3, 2011  |  3 Comments
Categories: foreclosure advice, going into foreclosure, home in foreclosure, responsibilities, short sales

Recently, the New York Times ran an article entitled “Foreclosures Are Killing Us”. The writer states that due in part to a large increase in foreclosure filings in August, in addition to a the $1 billion unemployed and underemployed housing program ending on Friday, that this is the perfect storm to bring on a wave of further foreclosures – which the writer points out will lead to an increase in depression, illness and other negative affects in communities across the country.

Yes, we agree that being upside-down is very stressful for homeowners. But note, millions not in foreclosure are also upside down and still making payments; which is even more stressful.

Many have placed their hopes on loan modifications and principle balance reductions, both of which have failed to date. The reality is that a foreclosure or short sale is the only reliable option to get out from under mortgage debt today. So does that make foreclosure the killer? Or is it the cure? We feel it’s the latter. What do you think?

3 Comments