77 NODs were recorded today and 73 have posted enough information that they can be tracked. 10 were HOA filings. Of the 63 remaining, 16 were on properties that are seriously behind on their mortgages. A NOD can be filed 3 months after the first missed payment, so we are seeing a good many 1 May and 1 April missed payments. Over 25% of the filings are for much greater delinquencies:
087-611-130 ($280K) – 3/21/08
026-672-03 ($420K) – 11/1/07!
132-290-08 ($172K) – 7/1/08
080-851-07 ($252K) – 2/1/09
025-180-02 ($152K) – 7/1/08
030-550-03 ($420K) – 7/1/08
129-251-10 ($364K) – 11/1/08
035-452-11 ($288K) – 8/1/08
508-476-26 ($220K) – 6/1/08
508-301-25 ($208K) – 7/1/08
021-383-06 ($262K) – 8/1/08
140-352-14 ($255K) – 9/1/08
090-292-18 ($228K) – 8/1/08
140-242-22 ($305K) – 8/1/08
204-221-17 ($225K) – 7/1/08
089-431-02 ($301K) – 11/1/08
I find it interesting that most of these properties aren’t just a couple months late on payments, they are a year or more in arrears. So did the memo finally go out to start clearing these off the banks’ books? There is the shadow inventory in the market, the properties that have started or have gone through the default process and then disappear. Now here is the shadow-shadow inventory finally making it’s appearance, the dirty little secrets the banks haven’t been talking about.
Waldo
I have two friends, who each own their own home. Well, they own it if you can consider somebody who owes $150K more than it is worth an owner. Both stoppped paying their mortgage last July. As in July of 2008. Neither has yet to recieve a NOD. They both have been living mortgage free for the last year. They both plan to stay in the house until the sheriff comes to evict them. I think this is far more common that might be thought.
Carney
Very interesting. A couple months ago somebody asked why don’t the banks sue for a deficiency judgment? Sue for a deficiency? Hell, it appears that the banks have enough trouble just getting around to filing a NOD a year after the borrower stops sending in the payment.
FutureRenoHomebuyer
Interested to hear from the gurus out there the implications of Mike’s commentary. Lots of talk out there about the shadow inventory — NOD’s that then fade from the listings and just sit. Not much about the “shadow-shadow” inventory — defaults from ’07 and ’08 (and early ’09) for which the banks haven’t even filed an NOD.
Why the wait on these NOD’s? Who benefited? Perhaps the banks just hid the bad loans to make their balance sheets look better than they were. Now they are finally fessing up — or they got taken over by another bank, which is fessing up.
Yes, there are beginning to be some deals out there. Who isn’t tempted by a 50% off sale? Yet, I still think it’s wise to wait this one out, at least until mid-2010 — earliest.
Catherine
I, too, know someone who stopped paying their mortgage last year and still has not had NOD filed. I am surprised her bank does not care.
But as for me, mine was posted soon after 3 months had past.
Unbelievable
“I find it interesting that most of these properties aren’t just a couple months late on payments, they are a year or more in arrears.”
That’s because the banks are slooooowly letting that shadow inventory on the market… after they so called stabilized the market..
See.. It works better for them this way.. by holding back they were able to bring back demand somewhat and stabilize the median..
this is just phase 2
cheers
Tom
When the banks start the NOD process, the properties are moved internally at most banks into a new non-performing category, “loans in foreclosure” or however each bank names that category. This is worse for the banks than having those properties where they were previously but `in arrears’ as secured loans. The reason is that in the more severe category, over-all ratios are adjusted, which in turn impacts the ability to write new business. Not being able to write new business can stalemate a bank, so they wish to defer the chance of creating ratios which approach that result. As they work through troubled assets, they will be able over time to move more properties through that process, but I expect the objective will be to do so slowly and in a controlled fashion. This hints to me that it could take several years to work through the backlog of where they would be if they had started on all properties promptly.
As to seeking deficiency judgments, generally speaking the poor defaulting borrower at that point is so far down the hill financially that he is not worth suing.
Tom
Add-on:
The bankers know they will be foreclosing on many of those properties waiting in line, but in the meanwhile, having them occupied is better than having them empty, in terms of safeguarding the collateral. Too many vacant REOs at once is hard to maintain and hurts the value of many more, so no need to start the process sooner than desirable.
ditz
We have a neighbor that actually brags about living in his home “free.” Said he stopped paying months ago and the HOA, bank, and mortgage company can kiss his behind. The house is trashed and yard is long gone.
When this person finally gets his no good behind thrown out of here, no love lost.
billddrummer
To Catherine,
When my house was foreclosed on, the process was like yours–3 months down, NOD filed, etc.
Too bad I couldn’t hold out until this year. I could have saved a bundle on rent.
inclinejj
I have always heard from the banks..We are in the lending business, not the property holdingselling/disposition business. Some of the things going on with short sales are pretty appalling.
For the first 6-12 months of this lending/banking/foreclosure crisis, The Banks where in full denial mode. Then they thought, wow, our forclosures are really adding up lets start selling, then it was lets hold out for highest and best price, even if it took an extra 6-12 months and the final selling price was much lower. Now they are in the holding of property not to flood the market. The State and Federal 90 day waiting period has done nothing but prolong this slump.
NOD’s are setting new records every month. Job losses are mounting.
Now Commerical loans that are coming due are being put into NOD.
Add in the Credit Card delinquency that is mounting monthly we have a huge mess!!!
Jessy
So, Nevada is a recourse state, but the banks have not been, as far as I have heard, going after the assets of the people that are foreclosed on. And, as Tom said, most of these people are so far in debt that it’s not worth it to sue them. Don’t the banks have 6 months after the foreclosure to go after the owner’s assets? If they wait to foreclose does it keep their options open and buy them some time to wait on the foreclosure? Or is this not play into their strategy at all? Just wondering what you all think.
Chimp
People make me sick. You bought it – pay for it!
Living in your house for over a year without paying your mortgage or rent – shameful.
You should distance yourself from such people.
A day will come when you will have to answer to someone much higher than a banker or lawyer.
In the interim we all pay for you.
Unbelievable
“A day will come when you will have to answer to someone much higher than a banker or lawyer.”
According to WHO?? take your religious spew somewhere else preacher boy.
Frost
Jealousy is an ugly, ugly thing….
MikeZ
Why the wait on these NOD’s? Who benefited?
Why wait? Because it’s sometimes cheaper to let the borrower contiunue to live in the house and maintain the property, than to pay a property manager for that.
Martin
It is no longer true that all people who are defaulting on their mortgages are the “poor defaulting borrower”. There was a time when those folks who lost their houses to foreclosure were, in fact, pretty bad off financially and there was no point in pusuing them for a deficiency. But that is not necessarily true today. Many defaulting borrowers today are actually quite capable of continuing to make the payment, and they have assets as well. They have made the calculated decision, however, that it no longer makes any financial sense to continue to pay the $400K mortgage on the $225K house. Many defaulting borrowers today do have assets.
Reno Ignoramus
There is an article in today’s RGJ that says that about 55% of all mortgages in Reno-Sparks are for an amount greater than the value of the house that secures the mortgage.
If this is accurate, this is astounding. More than 55% of all people with a mortgage in Reno are upside down? More than 55% of all people with a mortgage have no equity? According to the article there are almost 55,000 debtowners (can you really call them homeowners?)who are underwater. If only a small percenatge of them decide to stop feeding the alligator, we are looking at thousands more NODS in the future.
The housing market is not going to recover until the foreclosure pandemic abates, and this is not good news.
Connor
I agree that number of upside down borrowers is astounding. This bubble, and its aftermath which we will be dealing with for many more years to come, is going to fundamentally change the way people think about home ownership, or as RI puts it “debtownership”.
So imagine yourself sitting in a room full of people who do not own their house free and clear, but instead have a mortgage. Look at the peron to your right, then look at the person to your left. One of them owes more on his mortgage than his house is worth. The long term implications of this state of affairs for the housing market, and the economy overall, are sobering.
Chimp
Not religious…just hopeful.
Those that walk away from their house, or remain as squatters, with additional assets at their disposal should be liable and the banks must seek recourse. Plain and simple. You signed the contract.
Unbelievable
I paid cash for my house..
so umm yea
Steve
Chimp: A mortgage is a contract, no morals or ethhics involved. The contract stipulates the action that the lender can take should the borrower not perform. No further penalty need be added.
Reno Ignoramus
Some of you may know that I have been tracking the Smithridge condos to see just how low they can go. Just when I think they can’t possibly go any lower, they do. I got my start in Reno real estate with a Smithridge condo when I was a kid and still have a soft spot for that project.
339 Smithridge hit the market today at $40,000.
This is $21,000 less than I sold a Smithridge condo for in 1979, and $2,000 less than I paid in 1976. That was the Carter administration….:)
Sean
look at what i came across… 7910 opal station sold new in February 2006 for 378k. Went back to BofA in May and Sold 7-20-09 for 209k. Not a bad deal with a 45% discount off its original price. Now here’s the kicker. The new owner got a loan from BofA for $213,493 on a 209,000 purchase!!! Who says they arent doing 100% + loans anymore!
Reno Ignoramus
Gee, just 2 days ago, I commented that a Smithridge condo was down to $40,000, an all time low.
Today, I see where 25 Smithridge hit the market at $39,000.
At the height of the bubble, I believe that a couple of these sold for around $205,000. Probably not even Bantering Bear (where is he by the way?) would have predicted an 80% decline in price.
Looks like a race to the bottom has ensued.
How low can they go?
FutureRenoHomebuyer
RI,
Where indeed is Bantering Bear? I was just reading the entire blog post from Diane (“Gifting Listings…”), as was insightfully referred to by Arlo. He has a posting in that thread from 2 Sep 07 that absolutely, positively nailed the market (then and now).
From BB (again, Sep 07): “The idea that a seller can just pull their home off the market and wait for some magical turnaround in order to get their price is hysterical. They’re completely delusional. What they CAN expect is to lose another 20 to 30 percent should they decide to wait it out a few years. Make no mistake about it, if one wants to get the most out of their home, they need to sell at market value RIGHT NOW.”
Wow, pretty well nailed that one. What do you think of the market right now BB?
Jessy
I have wondered about BB too, whose comments were thought provoking enough to prevent me from buying a house 2 years ago when lots of people were calling bottom.
Chimp: I agree that people who “signed the papers” are liable, they borrowed the money to buy the property, and you say that the banks “must seek recourse”. Does anyone know of any bank that has? I don’t.
Walter
I am acquainted with a man who is a judge here in Washoe County and he tells me that he is unaware of any deficiency suit that has filed by a lender. That is not to say definatively that no such suit has been filed, only that he is not aware of one. As has been discussed here before, the lenders simply are not pursuing deficiency judgments.
EdBear
Hey RI,
Where are the Smithfield condos? They might be getting into a price range I can’t refuse.
Thanks
Reno Ignoramus
EdBear,
The Smithridge condos are in the southeast part of town adjacent to Peckham between Kietzke and Neil Rd. Certainly not the nicest part of town, but then not the worst either. If I recall correctly, they were built in phases from the mid 60s to the early 70s.
I was told once a long time ago that they were built by the Smith family of Harolds Club fame and former fortune. Hence the name Smithridge. I was never able to verify that as a fact however.
RB
UNbelievable you are an asshole.