I figured August would be an interesting month on the NOD/NOS/TD front. July was within .5% of record NODs, a record by a longshot for both NOS s and TDs. But then we got "The Bailout". Would it affect the numbers in a meaningful way, or would it be business as usual?
NODs reached a record level of 559, up from 549 last month. It should be noted that my NOD figures are a gross number, and include HOA filings. The actual number of bank NOD filings are running about 22% below the the gross number based on Ticor’s figures. I expect Ticor’s net NOD numbers to be about where they have been for the last 4 months – stable at record levels. I don’t take any comfort at the large number of HOAs filing notices to get their liens into first position in case of future default.
NOS’s dropped to 396 from 481 last month, but still reached the second highest level ever recorded. Is this an indication that the banks are starting take a breath, and look at renegotiating mortgages, or at least their stance on delinquent properties?
TDs were up to 288 from July’s 280, another record. But given the record NOSs in July, this is a significantly lower number of properties going REO than recent statistics would predict. The banks are definitely taking a step back, and evaluating what The Bailout means (virtually nothing in the end, in my opinion) before executing the Trustee’s Deeds. I know of at least 3 Trustee’s Sales in my immediate neighborhood that were postponed this month as the banks re-evaluated their positions.
So what do I see in the tea leaves? The Bailout was supposed to stop foreclosures dead in their tracks. Although it looks like it has had an impact, record numbers of foreclosures continue, and all those REOs will hit the market in a matter of days to weeks. My personal opinion is that The Bailout is smoke and mirrors, and will not help out many homeowners avoid foreclosure, if the bill’s revised and stricter lending guidelines are followed. Water seeks it’s level, s(ewage) runs down hill. Over 40% of restructured sub-prime loans have proceeded (again) into foreclosure in Cali. We will probably see a few months of reducing NOS and TD numbers, but NODs rising so the owners can get in line for The Bailout’s October 1 start date. Then storm clouds rising in December. Damn, coal in the equity stocking again
JnJ
correction * 2,200 houses have sold this year.
billddrummer
By ‘haircut’ I was referring to discounts of 20-30% on appraisals that were done 2 years ago. In some cases, you get additional collateral, in others, a principal paydown to keep the LTV conforming, and in others, you charge off the overleveraged balance.
And you’re spot on with the anomaly attached to lending up to your capital base to essentially one borrower. That’s what happened at a GA bank that failed last week–the bank apparently made 14 loans to various entities controlled by one person, up to their capital limit, and now all the loans are in default. So they got taken over.
I’m curious, though–when you were mentioning your market niche, were you referring to $5-$200 thousand or $5-$200 million?
CommercialLender
BillD,
I do commercial property loans $5M and north, maybe down to $3M for a relatively clean deal. If you need to reach me for business reasons, I’m always happy to help (domestic USA only). Dianne or Guy could privately email you my contact information.
As for 20-30% value drops in the commercial sector, again, I’m not seeing it, not at this writing. Land and condos sure, but not retail, office, apartments, warehouse, self storage, etc. Generally speaking, there’s no ‘distress’ to speak of in my space with larger, more sophisticated owners. Those clients are sitting on a ton of cash and are opportunistic, but sellers refuse to sell at those levels, so not much is trading hands at the moment.
Smaller, less financially sound owners, maybe. Assets purchased in the past 36 months with ultra high leverage, soon to be.
Sully
MKchick – I ran across an article that might explain the REO’s being vacant for so long.
Apparently, it’s becoming very difficult for a lender to foreclose, especially if it appears they were predatory lenders. If they can’t prove they did not do something wrong when they originated the loan; they have to pay penalties. In some cases (extreme?) that could mean the entire loan balance is discharged.
If this is in fact the case, then it’s no wonder there are so many houses sitting around collecting dust.
billddrummer
To CommercialLender,
Thanks for the clarification, and your knowledge. The deals that are now sideways are the LIFO developers that didn’t have the sophistication to begin with, and didn’t need it before. Most of the value drops I’ve been seeing are in the A & D and land deals. Stabilized properties haven’t shown much of a drop in my area either. I have noticed that it’s taking longer to reach stabilization, and there are still some folks out there offering overly generous T/I credits.
On the residential side, I’m seeing big drops in value for 1+ acre custom lots. But the people who bought them appear to be holding them until the market improves, whenever that is.
DonC
BB – I’ll stop drinking the kool aid if you put down the bong! LOL
I’m just going by the rule is that you can get a mortgage for twice your yearly income. Your friend has a yearly income of $200K. Mercer Island does have some variety of housing but leaving out the view properties most houses run between $775K and $1.25M. Freemont which you say is “working class” runs between $500K and $775K.
Phinney Ridge is nice BTW. It’s slightly upscale of Freemont but not all the different or far away. (FWIW I lived in Ravenna and Mercer Island years ago).
BanteringBear
DonC:
Perhaps you need to put down the bong, because you just pulled a bunch of BS out of you know where. If you’ll go back and read my post, I was talking about what a $200k per year income would purchase PRE BUBBLE. Your “most houses run” generalizations appear to be nothing more than unscientific observations of current wishing prices in each neighborhood. What do they have to do with affordability for any of these areas pre-bubble?
If you have been following the greater Seattle market prior to the bubble, as I have, you would understand that a nice home in Phinney Ridge would sell for between $250-$300k. A nice, livable home on Mercer could be had for $600k, easily affordable for someone pulling down $200k.
BanteringBear
Pardon me DonC, but nothing raises my hackles more than erroneous information regarding historical housing prices and affordability. There are innumerable examples of fine homes on Mercer Island that have sold in the $600k range pre-bubble.
My BS meter broke through the stop with your latest ramblings, so here’s a link to Zillow’s 10 year home price chart for a specific home currently for sale on Mercer. Notice it’s a 6 bedroom 3 bath on a shy acre; a very nice place. In 2002, it’s value was pegged somewhere between $500k to $600k. You should do a little research before you call people out.
http://www.zillow.com/homedetails/charts/48767820_zpid,5years_chartDuration
DonC
BB — I wasn’t trying to call you out at all. I just pointed out that your idea that a $200,000 income could get you into nice single family home on Mercer Island was wrong. Sorry if you interpreted this as a personal attack, it certainly wasn’t intended as one.
That said, the fact is that a $200,000 income can’t buy you a nice single family house on Mercer Island. The chart you cite proves that. It says that in 2001 the house was valued at $700K, which is considerably more than a $200,000 income can buy. So pre-bubble, post-bubble, whatever, buying in Mercer Island wasn’t really an option. (Of course if you go back far enough I’m sure you can find some point in time when a $200,000 income could have bought it, but at some point none of us had incomes).
Even more interesting is that you can use the Zillow charts to show that your friend made a wise decision buying in Phinney Ridge. Look on Zillow and compare housing prices in the 98117 Phinney Ridge zip code and the 98040 Mercer Island zip code. From 2001 to the present, houses in Phinney Ridge appreciated about 125%. Houses in Mercer Island appreciated about 50%. Obviously Phinney Ridge pre-bubble till now has been a hot area and therefore it was a good idea from a financial standpoint to buy there. (The neighborhoods are completely different and that’s another story altogether.
Royal Flush
BB and DonC please visit our new website:
http://www.mercerislandrealtyblog.com
or
http://www.phinneyridgerealtyblog.com
Thanks,
Management
BanteringBear
Very funny, Royal Flush. Point taken. I’m not here to talk about Seattle real estate anyhow, but I don’t like people spreading untruths, and calling into question facts and figures which they obviously know nothing about. In reality, there could be a reader out there who has considered a relocation to the PNW, and I want them armed with the truth, not someones deluded interpretation of it.
It seems DonC has a problem with facts, and reality in general. Had he actually looked at the 10 year value chart for not only the example house priveded, but for ALL of Mercer Island, he would have seen that in 2002 it was a hair north of $550k. EASILY affordable for a salary of $200k, especially with 20% down.
You have no argument DonC, and use baseless assertions instead of hard evidence. Come to think of it, weren’t you the one talking about the “freight train” of $200 per barrel oil? Bwahahahahaha! Perhaps you just enjoy exaggeration.
DonC
BB — Being rude and childish doesn’t make you right, it just makes you look rude and childish.
BanteringBear
I’m just being honest, DonC. You don’t know what you’re talking about when it comes to PNW real estate. If you can’t stand the heat, don’t play with fire.
derrick
speaking of 200 bbl oil./ Wasn’t I the one who first mentioned oil was going to DROP LIKE A ROCK? Only to have most of you morons tell me how wrong I was?
oh well! 105bbl now!
$$ bird calls are right as rain $$
derrick
oh and whats that.. the dollar has improved 13% over the Euro since my call on that ?
$$bird call are right as rain$$
smarten
On September 1st JnJ said “oil prices… Timmbeeerr!! Bird calls are right as rain.”
Now derrick says, “$$bird call are right as rain$$.”
Could JnJ and derrick possibly be one in the same? I guess birds of a feather…
And I thought we were going to stop posters like this going off topic?
MikeZ
RE: “And I thought we were going to stop posters like this going off topic?”
Me too, It was all talk, apparently.
Can anyone help me understand how this Reno real estate blog is better or more informative or more worth reading with Derrick posting unrelated oil baloney every few days in every other topic?
It’s time to put an end to it.
GratefulD_420
Mike – I think the answers to your questions are becoming clearer:
“I don’t take any comfort at the large number of HOAs filing notices to get their liens into first position in case of future default.
Is this an indication that the banks are starting take a breath, and look at renegotiating mortgages, or at least their stance on delinquent properties?”
— I think the banks were waiting for this day. Freddie/Fannie takeover, when the Feds are in position to buy all the bad loans so the taxpayer can foot the bill. I know their is some mixed opinions about how far the Feds will stretch to stop foreclosures and prop up the housing prices. Some say they will just keep %rates low and fees down to increase home purchases, others say they will move to stop foreclosures.
….. and the answer is…. they will do everything to stop foreclosures immediately. They will buy all the broken mortgages. They have clearly tipped their hand with IndyMac.
Just look here…. http://www.fdic.gov/consumers/loans/modification/indymac.html#eligible
Basically… If you can’t pay your mortgage… no problem:
(1) take the best availible fixed rate (soon 5.5%)..if that doesn’t help (2) take 45 yrs instead of 30…. if that doesn’t help (3) how ’bout principle forebarance….still can’t do it?…(4) How ’bout 5% interest rate paydown for 5 yrs…..no?… then 4%… no how about 3.5%.. can you pay it then? yes. great we’ll waive all your previous penalties and forget the 9 months you didn’t pay.
…. we’ll just send the bill to the taxpayer. Hope you like your house that you purchased well above your means!
What a bunch of jackals we run with.