[Ok I’m finally getting around to posting the charts from our friends at Ticor Title. Thank you everyone who asked about them (both on and off-blog); it shows you care… seriously.]
So, Washoe County’s recorded units sold (resales) continue to increase: 491 in June over May’s 444 recorded sales (resales). This increase represents more than a 10% increase in month-on-month sales. However when factoring in new home sales, which continue to fall, the increase in cumulative number of sales is closer to 1%; 658 total sales in June compared to 654 total sales in May. An increase nonetheless, and one now marking the sixth consecutive month of increasing units sold.
The second chart, which tracks Notices of Default filed with the county, shows declining NODs for the second consecutive month; finally bucking the meteoric rise depicted for so long in this chart. Looking back at the historical numbers, we’ve seen one-month dips before, but none lasting for two months. Let’s watch this one.
MILLER
OK…
Assuming that a large % of the NOD’s listed in the graph are going to end up as REO’s. What is the average timeline basically, from when a home hits the NOD to showing up on the MLS as an REO?
I’m sure there are 9 million factors that affect the timing of this, but “generally” speaking, what’s the lead time on NOD to REO?
Just curious what previous month/months I should be looking at to see what is hitting now and how that’s going to affect the sales numbers in the coming months.
I would think that if there is an increasing number of REO’s hitting the market, we’re going to continue to see an increase in sales at a lower median with these listings flowing into the MLS. Please let me know if I’m going down the wrong path…
Thanks,
-MILLER
Sully
I been following some of them, and it seems like its about 6-7 months start to actually seeing them on the MLS.
Guy Johnson
Miller,
My understanding is this: after the homeowner has been late on their payments for an indeterminate length of time (depends on the lender’s policy), the lender will file a Notice of Default (NOD) with the County. In Nevada, the NOD provides the homeowner with advance warning of a forthcoming Notice of Sale (NOS), or foreclosure. The NOS will arrive between 15 and 35 days from the filing of the NOD. The NOS provides the homeowner with 90 days to cure their situation [IOW, pay all back payments, interest and penalties]. So, between the NOD and NOS, the homeowner has approximately 120 days before the property is sold or taken back by the lender.
The discrepancies in the total timeline occur at the pre-NOD stage. Lenders vary on how much time they will allow a borrower to be in arrears prior to filing an NOD. Depending on the lender this can be three to five months, or even more. I was talking to an agent the other day who has a client who is nine months in arrears…and still no NOD.
So in answer to your question, take three to five months and then add 120 days, and you get seven to nine months before you will see such a property back on the market as an REO.
MILLER
If that’s the case Sully, then relating the info back to the chart, we should start seeing a pretty good increase of REO’s hitting the MLS in the next couple months!
Should be interesting to see if/how that will have an affect on the median sales price. That is assuming that they sell and the banks continue to price their listings to actually SELL them in the current market.
GreenNV
The fastest you can go from NOD to REO is 4 months – 3 months from NOD to NOS, 3 weeks from NOS to Trustee’s Deed, and another week to officially record the transaction. I’ve seen a couple hit the MLS the same day as the TD is recorded, but Sully’s right – most take 2 weeks to 2 months for the Banks to get their act together.
Combining Ticor’s NOD numbers and my NOS numbers, it looks like well over 80% NODs result in a sale notice. NOS to TD ratios have been all over the place, but look like about 70% right now.
Future Buyer
I’ve also watched some of them stay listed on the MLS and the bank just lowers the price–so sometimes they are immediate. Maybe this only happens if they are already for sale?
Future Buyer
Forget what I said–I was posting the same time as Guy who answered all the questions!
Guy Johnson
Wow! Looks like we all decided to answer the question at once. The 90 days plus ~21 days I stated are the correct lengths of times, but now after reading GreenNVs response, I think I may have attributed them to the NOD and NOS incorrectly. Reverse the order, if needed; but the total time is still the same.
cash buyer
hi all, over the past month or so, many expensive arrowcreek homes have had material price reductions. in the event the arrowcreek golf course can not survive, what will happen to the arrowcreek homes? does the homeowners association have enough financial reserves to operate? these are scarey times.
Future Buyer
I would also like to know what is going on with the Arrowcreek golf course. I think golf courses are hurting all over town due to the state of the economy. It is one of the many reasons we have put our home search on hold. Does anyone have any insight?
DERRICK
“I think golf courses are hurting all over town due to the state of the economy”
While that may be the case with some of reno’s golf course’s, It is hardly the case with Red Hawk golf course here in wingfield springs. How do I know this? I know many people that work and manage for red hawk.
Kevin Kearney
Unfortunately there is some bad news for the entry level market an it looks like the downpayment assistance programs allowable under the FHA are going to be a thing of the past.
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/21/AR2008072102456.html
FHA was becoming the dominant lender and 45% of the transactions were being done under these type of programs. This is certainly going to increase builder inventory and pull capital out of the market. This is a really big deal.
CommercialLender
Kevin,
79k of these loans per year is a small drop in the bucket of total homes, both new and existing, being sold each year. Seems to me this won’t have much effect overall.
Since I am no single family expert, and perhaps you are, any way you could clarify how many homes in the Reno area were financed with this type of down payment assistance program in the past year?
Kevin Kearney
My sources indicate that it could currently be as high as 17% (but is likely closer to 10%) of current SFR transactions in the Reno area and in some new home communities almost 50%. This program was just a blip on the radar until about 4 months ago. Most of the major volume has occured since then. The most significant impact will be on the builders who have been relying on this program heavily to get people into homes. There has been a flurry of activity in the last 3 months in new home sales as the prices have dropped. Many of those buyers in contract don’t have down payments and have been able to qualify as a result of the FHA downpayment assistance provision. FHA may ultimately wind up honoring those loans in progess which would help keep people from getting the rug pulled out from under them but if this just gets yanked entirely, many of those buyers won’t be able to buy and builders and other sellers will be left holding the bag.
Sully
Guy, Diane or JoAnn; I’m tracking some of the recent foreclosures. I noticed that only a handfull of April’s are on the MLS, none from May or June. By accident I found, in some cases, these houses do have MLS numbers but don’t show up on a search. I found this by going to zillow and it shows a link to the listing agents site.
If these are “pocket listings”, why do they have a MLS number?
This is the search link I’m using:
http://www.idxcentral.com/snar/idxsearch.cfm?idxid=krichmond
Sully
BTW; The foreclosures are the final stage as listed by the county recorders office, not NOD’s.
Guy Johnson
Sully,
If the listing you see has an (NNRMLS’s) MLS#, then it is on our MLS. If the other site you are using to search is not showing the property, then perhaps the site is applying some sort of filter.
– Guy
Sully
Guy, its the same search format as the one posted at top under searchMLS; I tried this one also, and still do not get the listing to come up, but can find the listing site on zillow.
So, I guess my question is: If there is a MLS number does it automatically go into the search database you use here?
Guy Johnson
Sully,
Perhaps you can send the MLS number to me and then I’ll verify if it is on the MLS. If you would prefer to send this to me off-blog, that would be fine.
Thanks,
Sully
7555 Vista View,Reno
MLS 80008479
This foreclosed 1/16/08. Just one example, I have found several that don’t show up on the search.
You can find the listing agent on zillow.
Guy Johnson
Sully, I just looked up 80008479 on our MLS. The listing is shown as “Pending-No Show”. I believe the search functionality on the public sites and blogs only shows Active listings.
GratefulD_420
Very concerned. Were are the July Foreclosures? The county has posted none on their web site? They have been very timely on these. Also we saw the June foreclosures & NOD’s take a dip at the same time. This was quite odd since we all seem to be in agreement that the TD’s follow the NOD’s by an average of ~6 months… and the NOD’s were building strongly 6 months ago.
Now with the sudden resolution in the House today & removal of Veto threat, I am suspicious that the Banks have all been holding off NOD & Foreclosure action, waiting for the Bailout.
This will be a devastating bailout. It will reward all of the greedy speculators, banks, lenders and irresponsible McMansion hungry home seekers, at the expense of the tax payer. Most of all it will penalize the people who did not participate in this hoax.
Fannie & Freddie will now fully take all the worst loans from Wallstreet – at tax payer expense (of course they’ll keep the good ones.)
However the part that is the most irrational and Un-American is this:
“$300 billion in refinanced loans for homeowners at risk of foreclosure, aiming to help as many as 400,000 homeowners trade expensive adjustable-rate mortgages for more affordable 30-year fixed-rate loans. To participate, each borrower’s lender must first voluntarily agree to reduce the principal balance of the loan to about 85 percent of each home’s current value.” -WSJ
This is clearly un-American and undercuts capitalism and the free market in unfathomable ways. Let me take you through an example:
1.) Joe Blow buys a $1,000,000 home in Golf Community, back in mid 2005 with a 3-year ARM.
2.) Joe Blow lied about income & really can’t afford the home. Especially with the deal he willfully signed including teaser rates. Joe Blow Goes into default
3.) The Lender now sees Joe Blow cannot pay & the loan will most definatley default and go to foreclosure.
4.) The bank gets an assesment of the 2008 value of the home at $ 800,000. Then they sell the loan at 85% value to avoid foreclosure and cost to the FEDS(tax payer if & only if it goes south).
5.) JOE Blow now is sitting in his $1,000,000 Golf Course home, now only $ 800,000 with a 30 yr fixed mortgage at FHA isured rate of $ 680,000.
6.) Joe Blow now has $120,000 worth of equity and can flip the house for a profit tommorow. Or he can just live in his fat house with propped up prices, protected by the tax payer.
Whereas the responsible American people are left renting, outpriced from a subsidized housing industry & with the tax bill.
I am very sad to be a homeless American paying the bill. but so happy that I had some extra cash to give Joe Blow $120 k to live at the Golf Course.
The only hope that I have is that the lenders are so greedy they can’t take the 85% haircut at the frontend and the legislation is inaffective and tru market priciples continue the correction to affordable levels.
DonC
GratefulD_420 – Your example may not be a good one because the program is limited in a number of areas and not as open ended as you’re suggesting.
First I believe the write down/refi package only applies to conforming loans, so Joe Blow wouldn’t be eligible because the loan would be a jumbo. (I don’t think Reno is a high cost area but I’m not from Reno so perhaps I am wrong).
Second Joe Blow would probably not be able to qualify for the new loan, which he would be required to do. If he has to lie about his income in order to qualify for one of the exotic “no down – negative amorization — low interest” loans, I can’t see him qualifying for a conventional fixed rate 30 yr. loan at triple or quadruple the interest rate, even with a reduced loan balance.
Third is that he couldn’t flip for a profit. I don’t know the particulars but there is claw back provision designed to prevent the flipping you’re concerned about.
I think a more likely candidate for the program would be the woman who cleans our house. She bought a modest house several years ago with a low interest variable loan. She had no intention of flipping the house. I’m sure she did not lie about her income. And I’m sure that she had absolutely no idea about the financing. I’m not sure she’s in trouble with her loan, but she may be, and if she is it would not bother me in the least that she qualify for a more stable long term loan.
Personally I think, if anything, the problem is that the program is too little. It supposedly can help “up to 400,000” borrowers. That sounds expansive until you realize that we’re expecting 3M foreclosures, which means that only 1 in 7 foreclosures will be potentially eliminated.
The tax credit for new homeowners may be more important. Interestingly this provision is less controversial, probably because it bails out stockholders in home builders.
MKchick
How is something a tax credit when you have to pay it back over time?
GreenNV
Not to worry about TDs, GratefulD. Right now, we stand at 202 for the month, 332 NOSs, and 422 NODs. Extrapolating, we should end the month at around 248/408/519. The Assessor’s office is swamped right now getting the 2008-09 property tax bills finalized and into the mail, and all their other tasks are taking a back seat.
I don’t really put much faith in the June drop in TDs. (218 from 233). The lenders tend to do their filings in “chunks”, and filing on the last day or the first day of a month can have a big impact. For instance, if the 27 TDs that were recorded July 1 had be recorded a day earlier, June would have shown an increase in TD volume.
NODs are definitely down. I’ve seen a lot of evidence that banks are extending their default periods from 90 to 120 or even 180 days. Some are filing NODs, but are delaying filing NOSs. The conspiracy theorists are saying the banks are doing this to cook their books, and they are holding out for the Government bail out package to take hold so they can dump their most toxic loans. Delaying foreclosure on maxed-out Option ARM loans actually makes a bit of sense, given the deferred interest and neg-am have been booked as an asset.
Kevin Kearney
MK…The way I understand the tax credit is that it has a recapture provision that is relieved over time. They want to encourage new buyers to stay in the home rather than flip it for the tax credit.
If anyone else is follwing the Nehemiah and other seller DPA programs it looks certain that they will be terminated under the plan but the estimated cut off date for loan approval is September 30, 2008. It’s a pretty sweet deal where 3% of the down payment is contributed on your behalf, but the window is closing. So if anyone is looking to get in on that program to purchase a house talk to Guy.
BanteringBear
“NODs are definitely down. I’ve seen a lot of evidence that banks are extending their default periods from 90 to 120 or even 180 days. Some are filing NODs, but are delaying filing NOSs. The conspiracy theorists are saying the banks are doing this to cook their books, and they are holding out for the Government bail out package to take hold so they can dump their most toxic loans. Delaying foreclosure on maxed-out Option ARM loans actually makes a bit of sense, given the deferred interest and neg-am have been booked as an asset.”
I’m reminded of an old saying: “A banker’s a fellow who lends his umbrella when the sun is shining, and wants it back the minute is starts to rain”.
I was thinking of coming up with my own saying. Something like: “The only good banker is a dead banker”. But then I thought, first, I don’t actually feel that way, and second, I sure don’t want to draw unnecessary attention to myself in such a public format.
But these bankers are scumbags. If the market was hopping right along, they’d be throwing people out on the street as quick as they could. The idea of these parasites waiting for a bailout, much less getting one, is enough to make me hoark up my dinner.
I don’t know what the hell our government’s thinking, but they need to stand back and let the market take care of itself, regardless of the consequences to many of these financial institutions. There is NOTHING worse than a policy of privatizing profits while socializing the risk.
I’ve got an idea. Let’s make the Wall Streeters, and all of the CEO’s of failing financial’s, pay back their entire salaries from the past 7 years. You know, the exorbitant ones which were paid for by greed and outright fraud at the expense of every honest, decent American who worked hard and tried to do the right thing while those pukes were jacking the whole system up. Absolutely sickening.
GratefulD_420
Don C. & GreenNV- many thanks for the input.
Today’s WSJ’s full article reads differently:
http://online.wsj.com/article/SB121681776929477089.html?mod=hpp_us_pageone
1.) Lender adjust to 85% of Current Loan Value not “Current Home Value”
2.) Loan Limits will be $ 425k OR 115% of local median [how exactly do they calculate this, for FHA loan?]up to $ 625k.
I guess I should really wait for the details after its signed into law, especially since the will be debating the deatils until Saturday.
MKchick
Is that “all credit card transactions will be reported to the IRS” part still in the housing bill?
Because that alone scares the heck out of me.
I’m with you BB… the whole thing stinks. No matter how many pretty dressings people put on it, Fannie & Freddie are insolvent. Instead of admitting the GSE exercise was a failure, the gov’t now wants to prop them up at the cost of taxpayers. Sickening indeed.
DonC
Here is a summary of the housing bill. As mentioned it’s a farily modest effort but hopefully it will help stabalize the housing market.
To answer GratefulD question about how a median price is calculated, I think it’s based on similar data that is used here (I don’t think Reno would be significantly affected by this, perhaps someone knows for sure).
http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf