Trustee’s Deeds continued their upward trend, with a new record high of 409 in July. June was 358, May was 210.
Notice of Sales came in at 674, down slightly from June’s record 690. May saw 639 NOSs.
I’m not sure what to make of the July Notice of Default numbers which plummeted to 711, the lowest number this year. Both May and June saw 950 NODs. I forget what moratoriums are going on, or maybe the wave has finally crested. Any thoughts?
If you are a visual person, here is a graph of the default activity for the last 2 and a half years. Pretty dramatic. You can double click on the chart to bring up the data set. NOD -T is TICORs default numbers, which used to be net of HOA notices. They have changed their methodology to reflect gross NODs, just like I do. Too bad.
An interesting NOS was filed this week on 740 California Avenue – Reno’s mansion row. The house was purchased for $167,963 in June 1989. The default is on a 1999 refinance with the amount owing of $383K. There is a HELOC of $100K from August 2000 that was bumped up to $180K in February 2003, so there is a total of about $560,000 owing. Does anyone know the story of this property? It has never (since 1999) hit the MLS, seems not to be horribly over-leveraged, and has a very interesting split between the loans if if does reach the courthouse steps.
There was an auction notice in the RGJ today for 5476 Reno Corporate Drive today. This is a 13,048 SF "class A garden office facility", with 7648 SF actually built out. Minimum bit is $2.2M, or $168 PSF average. The building was a "build to suit" for Art Associates, who subsequently went BK. It sold twice on 19 October 2006, first for $2,463,390 ($189 PSF) and then for $3,115,900 ($239 PSF), and it looks like the owner only has a $1,614,000 loan on the property. The other buildings in the complex sold for for between $200 and $300 PSF, but it is hard to know how to value the tenant improvements that were included. This one is an interesting look into what is happening here in CRE (commercial real estate). $2.2M is a dream, even if it represents a significant loss for the owner. I could make a case for $1.5M, given that the existing TIs (tenant improvements) are basically worthless to any other tenant and that the rest of the space is in shell condition, but I’d still probably be considered an optimist in this lending environment. What do you think CL and IJJ?
Let’s do August!
Reno Ignoramus
Mike, I posted two weeks ago that this month’s NODs were going to be down (and that no doubt the realtors and RGJ will herald it as the beginning of the end of the downturn).
Recall the mediation foreclosure law came into effect on July 1. This law requires a new set of disclosures that foreclosing lenders must supply to the defaulting owner when a NOD is recorded. My speculation is that the new law caused enough lenders, especially at the beginning of the month, to hold off recording the NOD until they had figured out what the new requirements were. If you look more closely at July’s NOD recordings, you will see that the numbers were way down in the first 2-3 weeks of the month, then started to return to the normal pace as the month finished up. I think the lenders were just trying to make sure they were in compliance with the new requirements. We will have to seee what happens in August in September. If the numbers return to what they were, then we can probably attribute this month’s decline to the new law.
Regarding the 409 record number of TDs in July, this number will likely be greater than the number of REO houses that sold in July. In other words, this month, like last month, will see a net increase in the REO inventory. There will not be a decrease in the REO inventory.
inclinejj
I had a conversation with a borrower today who was 6 months down and they said..Well, the lender stopped calling us every day. That just means the file was worked over for 90 days and it went over to the non collectable desk for the NOD to be filed..He told me the last time I didn’t pay them it only took 3 months to put me in NOD, like it was a proud moment.
When Banks get scared or nervous or the regulators are inside them for an audit they sit on the fence and do nothing.The California plan put another 90 day waiting period on the time of filing plus the bank has to do a lot of internal stuff and offer a work out. I saw one of the old sheets they use to determine how much the foreclosure will cost them..I am seeing the lenders write down the debt about 50%. I am also seeing quite a number of properties get sold off to investors on the court house steps.
In 90 days we will have another surge of NOD’s and sales posted..Everything they do just puts out the recovery that much longer.
I spoke to 3 of the big hitter REO and short sale agents in town today..They told me lenders are doing things that make no sense like killing deals for a couple thousand bucks and demanding personal notes for the difference in a short sale..I mean who in the world would sign a personal note like that.
Peter Lynch always said..The biggest fools in every market are the ones trying to time the tops and bottoms..
That class A commerical property would work for an owner-user who can get an SBA loan with 10% down.
Back2Basics
What inclinejj says rings all too true in our personal little world right now:
“I spoke to 3 of the big hitter REO and short sale agents in town today..They told me lenders are doing things that make no sense like killing deals for a couple thousand bucks and demanding personal notes for the difference in a short sale..I mean who in the world would sign a personal note like that.”
The house we’re trying to buy is coming down to a matter of 3000 extra bucks that the 2nd mortgage guys are demanding or they’ll hold the lien over the sellers’ heads. It’s so frustrating because the 1st mortgage has already accepted everything and wanted to close in July. What’s really ironic is that both mortgages are held by the same bank, yet it’s quibbling over $3000 with itself?!?
We knew coming in to this how risky short sales are, but thought we’d try for it anyway because we haven’t seen anything better for our family in our price range. We would totally pay out the extra $3000 to get our house, but supposedly we buyers can’t do that.
Martin
Mike, check out the listing on Crystal Park Road in Verdi that you posted about not too long ago. The first price reduction is already in.
It won’t be the last.
Martin
Check out MLS # 90011061. 3113 Bramble in Mayberry Meadows. This house sold for $430K three years ago. Now on the market as an REO for $234K.
This house sold for $164K brand new 20 years ago.
This is an example of how the REOs are now moving into nicer neighborhoods and taking the values down with them. Somebody (RI?) said about a month ago or so that the REOs are no longer just in Stead and Sun Valley. This house will no doubt sell for above the $180K median, and thus contribute to a ‘rising median’, which all the cheerleaders can then cite as evidence of the market’s recovery. In fact, just the opposite is happening. This is a 1997 price for Mayberry Meadows.
inclinejj
So the Gov’t PR Deptartment put out a news clipping yesterday that we are that the bottom and the economy will improve and the recesssion is over..Happy Days are here again
After people got the credit card balances cut to what they owe and they turned many A borrowers into subprime borrowers over night..Thank you for getting us out of the recession(eyeroll)
I am seeing Sales cancelled and then reposted a day later. I am seeing sales cancelled and new NOD’s filed a day later..
Going to a trustee meeting this week should be interesting..
A friend of mines son was ready to close and the lender hit them up for an extra 3k to close at the last minute..I told them to pay the 3k to close then write a letter to the President of the Bank’s office with a demand to refund the 3k..Worth a shot I guess??
He with the gold makes all the rules..aka Banks, Insurance Companies
CommercialLender
Mike,
I don’t know the commercial property you speak of, but will try to dig tomorrow. I can tell you on a knee-jerk: ain’t no way worth even the opening ask of $168 psf. We’ve just seen 3 assets in downtown SF go back to the lender and get scooped up by an investor for $173-180 psf, good assets, well located, class B+ office deals. Amazing. Your $1.5M guess at $115 psf is still too high, IMO (again, I don’t know the exact building). The asset is unfinished and vacant – similar assets, as described, in Silicon Valley would be $70 psf to $100 psf, depending on the asset/location and true condition/TIs, and near complete lack of financing for said type asset today. In fact, this will very likely be an all-cash deal, or someone who has a line of credit with their relationship bank. Thanks for the interesting story, and I’ll see if I can turn up anything.
***
There’s a small, new community in the ‘North Tahoe / Truckee’ area (it’ll go unnamed) that I’ve been eyeing for a while. In nearly 2 years, I’m aware of them selling only 4-5 homes, 2 or 3 of which are back on MLS by sellers. They told me the other day they’ll keep open the sales office until mid Sept, then shut down for the winter. They say each home at their new prices are ‘builder short sales’ meaning they are paying cash in addition to my purchase price to get the bank to release that portion of collateral from the construction loan. Now, why on earth would I want to buy said home? The development is soon to be in foreclosure, no/few neighbors can’t be a good thing for crime and HOAs, 2nd home market is very risky with 10-11% ‘official’ unemployment, the winter season with a closed sales office will accelerate the drop in values, etc.? The problem is beyond desperation here, and in many other developments across the land. Because these developments take 2-3 ish years to come to market, 1-2 years to not sell out, I think there are sadly all too many other developments just like this one, that are soon to hit the banks REO list. Their loans were obtained circa 2006-2007 or even 2008, but I wonder what they’ve been marked down to on the banks’ books to date? Another reason why I think we are in this malaise for another 3 yrs.
inclinejj
The condo complex right up the street from the Blue Coyote and 7-11 went to foreclosure sale..One is the Boulders the other is the Timbers..They both went back to the lender.
There is another new development that I know of behind the 50-50 Brew Pub that might be in danger of going into NOD
Also Construction Trust Deeds are written for 12 months to 24 months and it costs the builder or developer money every extension period..
Now that the FDIC told lenders to curb Construction Loans, the hands are tied at the bank to extend..
willk
I’ve been looking around the Sommersett area. I keep hearing how banks are holding back foreclosures to avoid flooding the market. We have driven around almost every street and I doubt if I’ve seen more than 8 dead or dying lawns (not counting Del Webb or courtyard homes). There are a lot of short sales but they seem to be moving pretty fast. Seems Sommersett should be one of the hardest hit since most people bought near the top of the market,yet from what I see,things don’t look too bad.
Reno Ignoramus
Hey incline…
Do you have any more info on the Boulders condo project in Truckee? Only two weeks ago I walked the project with an acquantance who has been looking at condos in Truckee. There is the slab poured for a section that obvioulsy never got built. There is some undeveloped land by the pool. The realtor lady on site, who said she is married to the developer, never said a word about a foreclosure. She said there were only 4 units left for sale, and that her husband is planning to build out the rest of the project. So I find it quite interesting that project has been foreclosed. Do you have any more details?
SkrapGuy
Short sales in Somersett moving pretty fast?
Ha ha willk. That’s a good one.
You might want to talk to Diane Cohn about how fast short sales are moving in Somersett.
I wouldn’t judge the economic conditions in Somersett by the conditions of the lawns. For example, the lawn at 1990 Russell Pointe in Somersett looks quite nice. The owners of this nicely maincured house have over $900K into it. They have it listed as a short sale at $450K, and can’t get an offer.
Martin
willk I was wondering if you could perhaps refer us to some Somersette properties of which you are aware that were fast moving short sales. My observation of the Somersett short sales is that they have been taking a painfully long time to close, if they close at all. So I sure would like to know which ones have closed fast as you suggest, and how long from list to close it took to consummate the deal. Thanks.
Also, I believe that Somersette is spelled with only one m.
GreenNV
Somersett is a bit of an enigma at this point. I know of at least 100 NODs / NOSs filed on properties there, but until wiiik’s comment, I never went back to review the situation. Only 18 properties have actually been foreclosed on, plus 4 in Sierra Canyon. (over half of those were owned by Realtors, but that’s another story). So where are all those problem properties?
willk
Sorry. I should have disclosed I’m just someone who has been watching the Somersett real estate market for a couple of months (looking at the MLS listings daily and driving around once a week). I wasn’t talking about actual closings on short sales (just pending offers). Yes, I’ve also seen a few relisted.I don’t know why the Russell Point property hasn’t had any offers. Looks like a steal to me but it’s still above my price range.
Reno Ignoramus
Mike/Green,
Somersett is perhaps the precise example of what I refer to as MIA NODs and NOSs. Over 100 NODs, but only 18 actual foreclosures?
Where, oh where, have the NODs gone/ Oh where oh where have they gone?
AnotherJoe
On Somersett.
What’s up with the pool scene? Finally took some friends up on the invitation and was suprised by the enhancements, tatoos, and escalades. Where is the money coming from?
Great pool. Lots of fun but was suprised by what I saw.
inclinejj
Reno Ignoramus said, in August 2nd, 2009 at 6:58 pm Hey incline…
Do you have any more info on the Boulders condo project in Truckee? Only two weeks ago I walked the project with an acquantance who has been looking at condos in Truckee. There is the slab poured for a section that obvioulsy never got built. There is some undeveloped land by the pool. The realtor lady on site, who said she is married to the developer, never said a word about a foreclosure. She said there were only 4 units left for sale, and that her husband is planning to build out the rest of the project. So I find it quite interesting that project has been foreclosed. Do you have any more details?
RI. I have a file on it..My buddy in SoCal was chomping at the bit to take over another foreclosed project and finish it out. I told him the dom and the holding period in Truckee would be too long, and the stated lending starting to dry up it wouldn’t be a wise choice.
Some guys from the Bay Area where the original developers and the lender was a pension fund lender down in San Diego..The builder and lender didn’t figure holding time and DOM to sell properties in Truckee and ran out of money making loan payments. They didn’t get an extention and the lender took the project back.
I am not sure if the original developer or the guy they hired to finish the project off is the sales ladies wife.
Email me off the site..and I will try to find the file..It may be up at the Lake and I am in the BA
jjadco@aol.com
inclinejj
Hey Commerical Lender can you email me off site
Jjadco@aol.com
billddrummer
Back to RI’s comment at the top of this thread:
I commented on that phenomenon last week:
“To 3niner,
I did a search yesterday on the recorder’s website, and 1555 TD’s have been recorded from 1/1/09-6/30/09. If you look at the YTD chart in this report, about 1100 bank owned properties sold through June. So it seems to me that about 400 bank owned properties were in inventory at 6/30/09. According to the report, 184 new listings were bank owned, which would leave more than 200 unmarketed through MLS.”
And that’s just the ones that have already gone all the way through the process. Chances are good that even more are being held out of inventory for some future time.