If you received a foreclosure notice this year, you're not alone. According to tracking firm RealtyTrac, 1.6 million properties received a foreclosure filing -- defined as default notices, auction sale notices and bank repossessions -- during the first half of 2010. The good news: that number is down 5% from the previous six months. The bad? It's up 8% from the first half of last year. And RealtyTrac doesn't see any relief coming, as a "massive number of distressed properties and underwater loans continues to sit just below the surface."
While June's total of 313,841 properties with foreclosure filings marked a 3% decrease over the previous month, the news wasn't exactly good for the housing market (not to mention the owners of those 313,841 properties).
“The second quarter was a tale of two trends,” said James J. Saccacio, chief executive officer of RealtyTrac. “The pace of properties entering foreclosure slowed as lenders pre-empted or delayed foreclosure proceedings on delinquent properties with more aggressive short sale and loan modification initiatives. ...“The midyear numbers put us on pace to exceed 3 million properties with foreclosure filings by the end of the year, and more than 1 million bank repossessions. The roller coaster pattern of foreclosure activity over the past 12 months demonstrates that while the foreclosure problem is being managed on the surface, a massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market."
The top foreclosure locations: Nevada, Arizona and Florida, with California, Utah and Georgia just behind.
1.65 Million Properties Receive Foreclosure Filings in First Half of 2010
The information is based on April data and is therefore consistent with
the CS report. Both New York and Florida are at the top of the list of
states with the longest period between initial default and final
foreclosure. For the nation as a whole the number of days has nearly
doubled over the past few years. NY and Florida are 31% and 21% higher
than the national average.
This is not a coincidence. This is cause and affect in action. I live in
metro NYC and own property in S.Fl. I see what is going on. There are
many middle to upper price homes on the market that have not seen an
offer for more than a year. A good number of these are already in
default. The borrowers are underwater and there is nothing they can do. A
HAMP style ReFi accomplishes nothing. I know people in both areas who
have contacted their lender and have been told to come up with an
acceptable short sale or deed in lieu transaction. The borrowers have
been told by the bank(s) that if they do not cooperate they will have
their credit wrecked and be subject to default judgments. So the
borrower puts the house on the market and hopes for an offer that is
acceptable to the lender. In the mean time they stay in the home for up
to two years and pay very little (if anything) on the old mortgage.
There is substantial evidence that these people are buying IPhones and
going on vacation with the money they are saving by not paying the debt.
Some thoughts:
-This “extend and pretend” at its worst.
-The lenders will not let this continue forever. The day of reckoning is
coming. It well be felt in all of the states. It will be felt hardest
in the states that have the highest days to foreclosure numbers.
-As a former owner is foreclosed they will be forced to rent. Given that
few in this category are paying any meaningful amount of their current
monthly mortgage it is likely that they will have less disposable income
post foreclosure.
-My conclusions:
(A) RE in Fl and NY is going to tank this fall.
(B) Consumer demand for things from clothes, gadgets and leisure is
going to suffer an out sized decline.
(C) The extend and pretend policy is catching up with us. This approach
was a “buy some time” idea in the hope that things would work out. They
have not worked out. We are about to pay the price for that failure.
If we revert to more traditional levels in the ratio of initial default
and foreclosure we are going to hit an economic wall. This is just one
more thing stacking up against us.
formulated
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