This Week @ the Courthouse

General by Mike McGonagle

There were 93 Trustee’s Sales scheduled for the courthouse steps in the past 8 days (that’s as far back as I can accurately track the results).  46 (50%) went back to the bank.  41 (44%) were canceled.  4 (4%) were postponed, and 2 (2%) were sold to third parties.

This a HUGE difference from the numbers when I checked them a couple months ago, when only about 15% were going back to the bank, and over 80% were being postponed.

What’s going on?  The bump in the percentage and number of TDs looks to me like the banks are clearing out some of their backlog, many of which are "stale fish" defaults almost a year old and are hopeless.  The rise in Canceled vs. declining Postponed Trustee’s Sales swap is curious.  I’m no expert on all the NRA minutia, but I think when the bank cancels a NOS, they have to refile another one  to get to a Trustee’s Sale (but don’t have to go back to the NOD level)., whereas a postponement does not require any refiling. 

Is there a great wave of successful loan renegotiations going on that has precipitated the steep increase in Cancellations instead of Postponements?   May be, but it certainly hasn’t shown up on my radar from any of the Recorder’s records I track.  Does eliminating the Notices of Sale from their financial positively improve the "financial" of the lenders?  My guess is YES, or it wouldn’t be happening.

Mikey’s Law – the higher the loan balance, the slower the foreclosure action.  Anyone want to nominate the blog for the 2010 Nobel Prize in economics?

40 comments

  1. FutureRenoHomebuyer

    Mike,
    Trying to find out what this means, but I’m coming up zeros. Some questions to the assembled experts out there:

    1) Is the data set of 8 days large enough?
    2) Are these normal numbers for cancellations and properties going back to the bank?
    3) Is there any implication here on shadow inventory?

    Most importantly, is this bullish or bearish? Smarten, BB, CL, any comments??

  2. Reno Ignoramus

    It is fundamental that the larger the data set, the more reliable and valid the data. 8 days is pretty small to reach any conclusions.
    I don’t know how Mike collected this data, but if he went down to the courthouse for 8 days in a row, that is a laudable thing, and I say thanks to him for doing that.
    And you are correct, Mike, in that a cancellation requires going back and recording a new NOS, but a postponement does not.

  5. Sully

    pixie, It doesn’t matter where you post no one else follows the topic either. 🙂

    And I agree, it doesn’t past the smell test.

  6. willk

    I noticed Lakemont sold 4 of their largest series of homes at Canyon Pines in the past few months (in construction phase). Ryder built one at Talon Point, listed it on the MLS and sold it before it was even finished. There is virtually nothing under $400,000 in Somersett for sale except for some courtyard/duet homes (and even some of them have offers).

  7. Worried Guy

    BTW…The Author in the story about the Lake Ridge home is mistaken about a lower price transaction resulting in lower property taxes. As we have discussed over and over again here, the tax is attached to the home and not the transaction. The home could sale for $1 and the property tax obligation is still going to be the 2009-$9,825.24 plus 3% or 8% (if rental or second home). Only until the Assessor revalues the homes lower and that eats away at the abated tax from 2005 to zero will the tax be reduced.

  8. Clifford

    Interesting article. Taanks for posting pixie. Even if what is described is accurate, good luck with taking on BoA. Good luck with complaining to the Comptroller of the Currency.
    Maybe one of BoA’s 500 lawyers will get involved. Maybe 5 of its 500 lawyers will get involved. Maybe BoA will just blow it off, which is the most likely result. Remember BoA is too big to fail, and too big to care. Maybe the Comptroller will put the case on its “to do” list.
    Meanwhile, it is amusing to see the Lakeridge people piss and moan.
    My heart weeps for them.

  9. Raymond

    willk,

    Are you kidding? Can you not count? There are more than 50 houses for sale in Somersett under $400K without offers. And then there are about 25 or so ‘pending short sale’ under $400K which means they may never go on to close.
    You keep shilling here for Somersett. Are you a realtor or a Somersett debtowner?
    Please don’t insult us all with your patently false comments. This is not a case of predicting the future, where reasonable people can disagree. How many houses there are for sale in Somersett under $400K without an offer is an objective fact. All anybody needs to do is look it up on the MLS.
    What’s up with your continual nonsense and patent misrepresentation about the facts?

  10. bob c

    i’ll buy that home sight unseen for 371

    the transaction doesn’t smell…it stinks;
    someone on the inside wanted that home, why can’t
    their name be made public?

    they will now record it under someone else’s name,
    because if they intend to live there–they will
    be exposed and they probably won’t live there now
    for at least a year because they are in the public spotlight

    i’m a contractor…..95% probability of insider
    activeity 5% probability the banker was stoned
    or did a typo when listed at 371

  11. bob c

    okay i get home for 371K

    hey mr assessor, please come to my home and re-assess it…..if you don’t bring it down to below
    400K i’m going to sue the county—look at my
    crap hole of a home

    i hate crooks!!!!!!!!!!!!!!!!

    🙂

  12. Mario

    Bank of America and the Comptoller of the Currency have a symbiotic relationship, especially today. Much like the symbiotic realtionship between BofA and the Fed, and the Treasury. Since last year, it is very difficult to know where one stops and the other starts.
    It may not be right, but clearly that is the way it is now.

    Who knows. Maybe the Comptroller will look into it. Maybe they will lauch an investigation. Results ought to be back by 2015.

  13. bob c

    if you are going to rig a bid—-you can’t
    make it so obvious

    that article touched a nerve with me—it might
    be some mid level dweeb that devised the scheme
    to get that home…his/her once in a lifetime
    opportunity to cheat and they got greedy and
    made it obvious

    everyone has a bit of larceny in them, but come
    on this transaction will be outed

  14. SkrapGuy

    An insider deal? From BoA? I’m shocked.

    We have all just grown too accustomed to things like this happening only on Wall Street and in DC.

    Things like this never happen right here in River City, right?

  15. Sane Economist

    Guys,
    Not to rain on your parade, but consider the big picture. The house was originally listed at $1.8 million and we’re squabbling about 371K v 500K?
    Smarten, are you out there? This is a portend of the future of so called high end houses. I thought $1 million houses would sell for 500K. Looks like I was wrong. $2 million houses are going to sell for 500K

  16. GreenNV

    If you guys ever catch me posting an article as poorly fact-checked as the RNR article, I’ll never post again!
    – The address is 2550 Lake Ridge Shores East, not Lakeridge.
    – The loan wasn’t for $1,100,000 as stated, but for $1,040,000. 125% Option ARM with minimum payments, so the default amount was $1,172,385.
    – The owner didn’t default in March 2009. The NOD was 4 December 2008 on a missed 1 August 2008 payment.
    – The Trustee’s Sale was for $807,500, not $807,000.
    – The sale at $373K won’t affect property taxes (as already noted).
    – BofA did not buy the property from WAMU at the sale. They already owned the note, and WAMU was just the servicer at that point. Lasalle bought it as part of a security from WAMU, and then BofA bought Lasalle.
    – Interesting, I can’t find a recording of this transaction closing, and I’ve searched all Deeds granted by BofA since the listing date.

    This is definitely an inside job and reeks to high heaven. Greathouse is the big kahuna of REO sales these days, and there is no way she would have priced that house so low unless she was pressured or was in on the deal. It will be really interesting to see who the buyer turns out to be, or if BofA gets cold feet on this one.

  17. Ralston

    If this deal happened with a house in an upscale suburban neighborhood of DC, and the buyer was an influential member of Congress, everybody there would understand it as “business” as usual. I know, I used to live there, and it happened all the time. (It still does).

    And I agree with Sane. The big news here is not the squabble over who got the deal at $500K or $371K. The news is that a Lakeridge Shores house just sold for $371K. Recall too the 5600 sq. ft. Caughlin Ranch house, also a bank REO, now in escrow at $78 a sq. ft.

    Don’t get distracted by a pitch in the dirt folks. The story here is that the top end is starting to crack, and the banks are leading the way down.

  18. willk

    Wow Raymond you need to chill out. There sure is a lot of hostility on this board. I am not a realtor. I’m a future buyer who is not in any hurry but do want to time things right. Actually, since I can’t move fulltime for another 3 years minimum, I’m better off the longer the Reno market stays down. I look at the MLS listings every day and travel to Reno frequently and I was just observing that sales seem better than what they were a few months ago. I know a lot of those are REO etc. But I’m also seeing regular sales that are priced realistically get offers. It may just be a blip. I just wanted to see if anyone else is noticing.

  19. Sane Economist

    There is only one issue here. Was this transaction legal or not? Smell test etc. doesn’t matter.
    I’ve reread the article and on the surface all appears legit. Time will tell.
    Personally, I think this transaction is a case study of the destructive
    havoc brought about by deleveraging.

  20. Raymond

    Willk,

    Come on, what you said was:

    “There is virtually nothing under $400K in Somersett for sale except for some courtyard/duet homes”.

    That is an absurd statement. I simply pointed out how patently absurd it is by noting that there are more than 50 houses in Somersett for sale under $400K, and more like 75 houses if we include the “pending” short sales.

  21. Caryn

    A simple MLS search reveals there are in fact 90 houses for sale in Somersett for $400K or less. In fact, more than 70% of all Somersett listings are at $400K or less.

    Sorry willk, but your statement was totally bogus. No hostility here, just pointing out what an elementary search of the MLS discloses.

  22. willk

    Ok, maybe I could have worded things better. My point was that I see new houses still under construction that are already sold. Also I see less “active” homes available on the MLS listings. Maybe some of that is less people are listing this time of year. Maybe some of it is the tax credit expiring. Hopefully it’s because we are at or near the bottom.

  23. Carleton

    The thing that most attracted me to this blog several months ago is that it has an extraordinary Bullsh!t Detector.

    Lesson learned, Willk. But hey, it could have been a lot worse. Bantering Bear must be taking the day off.

  24. smarten

    Sane –

    If you’re so convinced your run of the mill $2M IV property will soon be selling for $500K, then why didn’t you take me up on my “claification” of your bet? Tell you what; I’ll drop the bet to $100 because I want to keep it “friendly,” but the 2 year time limitation [retroactive to the date you first communicated your bet] stands! And to tie one hand behind my back, how about if ANY of the five $1M properties I highlighted resells for $500K or less via in a conventional sale [i.e., not a probate nor trustee’s sale] within the next 2 years, you win.

  25. Inept One

    A quick search of Somersett homes under 400,000 shows that there are a total of 90 active and or pending listings.17 of these are not in the actual “Somersett” association and do not have any amenities. 31 of these listings are in the cluster or courtyard format.(the Vue and the Village). 24 of these listings are in Del Webb and seem like a good value for those over 55. This leaves 17 single family dwellings available to anyone without age restrictions. 8 of these 17 are “pending”. That leaves 9 SFR listings in Somersett under 400,000 available. These are the facts. Have fun with them!

  26. Quinn

    Ok, let’s take Del Webb out, and then we’ll take out the Vue and the Village, and then let’s take out the houses that are not in the association, and then let’s take out those houses on the north side of the street that get too much snow in the winter, and then let’s take out the houses on the street that is the epicenter of the earthquake cluster. Maybe we can spin and shuck and jive enough to make it look like there are NO houses for sale in Somersett at all.

  27. Inept One

    Say what you will, I gave you the facts.

  28. Lurch

    Speaking of the ‘Sett, anyone else notice that our favorite house on “Manorfalcon” has dropped off the MLS? No new deed has been recorded.

  29. FutureRenoHomebuyer

    Another wrinkle in the foreclosure cataclysm — securitized mortgages where no lender can legally show ownership. Gretchen Morgenson has a great article in the Sunday NYT examining the issue:

    http://www.nytimes.com/2009/10/25/business/economy/25gret.html

    “Even so, banks and borrowers still do battle over foreclosures on an unlevel playing field that exists in far too many courtrooms. But some judges are starting to scrutinize the rules-don’t-matter methods used by lenders and their lawyers in the recent foreclosure wave. On occasion, lenders are even getting slapped around a bit.

    One surprising smackdown occurred on Oct. 9 in federal bankruptcy court in the Southern District of New York. Ruling that a lender, PHH Mortgage, hadn’t proved its claim to a delinquent borrower’s home in White Plains, Judge Robert D. Drain wiped out a $461,263 mortgage debt on the property. That’s right: the mortgage debt disappeared, via a court order.

    So the ruling may put a new dynamic in play in the foreclosure mess: If the lender can’t come forward with proof of ownership, and judges don’t look kindly on that, then borrowers may have a stronger hand to play in court and, apparently, may even be able to stay in their homes mortgage-free.

    The reason that notes have gone missing is the huge mass of mortgage securitizations that occurred during the housing boom. Securitizations allowed for large pools of bank loans to be bundled and sold to legions of investors, but some of the nuts and bolts of the mortgage game — notes, for example — were never adequately tracked or recorded during the boom. In some cases, that means nobody truly knows who owns what.”

    I guess that’s one way to stabilize the market…

  30. nvmojo

    Regarding that RN&R story, I still don’t buy the family guy’s claim that he wasn’t buying the house back to help out his brother-in-law who, not only just lost his house but lost his business/casino. They are no different then the BofA on this offer/deal.

  31. nvmojo

    Also, I agree, the big news in that RN&R article is really about the price drop in that particular neighborhood. It’s happening all over.

  32. reno newbie

    “Also, I agree, the big news in that RN&R article is really about the price drop in that particular neighborhood. It’s happening all over.” last year 5620 brookmeadow was around 1.3 today bank owned listed 613. 2 acres

  34. inclinejj

    I’m no expert on all the NRA minutia, but I think when the bank cancels a NOS, they have to refile another one to get to a Trustee’s Sale (but don’t have to go back to the NOD level)., whereas a postponement does not require any refiling

    The trustee can cancel the sale but post the property for Trustee sale and repost the property and bring it to sale w/i 21 days

    They can also postpone the sale up to one year from the original sales date

  35. GratefulD_420

    Reno Newbie,

    Let me first say I’m no expert… but to the best I can tell….the brookmeadow home is in the flood zone. Very, Very expensive insurance.. if even possible, considering the construction type.

  36. MILLER

    13165 Welcome Way Reno NV 89511

    Alright… Speaking of “interesting” litigation. I signed up for ePropertyWatch.com from Mike’s posting a couple weeks ago. This house popped up in my neighborhood. I started looking through the records, and from the looks of it, they pretty much wiped their mortgage clean through a “Racketering” lawsuit against Wamu.

    Can someone with better research skills than me validate what I think I’m reading into, and speak to the possibility of seeing more of these suits against mortgage companies for the same reason?

    Just thought it was an interesting curve ball when I was doing my “research” on potential properties in the area…

    Thanks!

  37. FutureRenoHomebuyer

    Miller,
    If it is true that the loanowners of the property you were investigating at Welcome Way got out of their mortgage with WaMu through a lawsuit, I think it definitely merits further investigation.

    Could this be part of the answer to the “shadow inventory?” In other words, properties served the NOD are not go back to the bank as a result of lawsuits by the loanowner.

    Referencing my earlier post regarding the Sunday NYT article by Gretchen Morgenson and I wonder if this is the beginning of a trend.

    With over 3,000 homes in Reno in some stage of foreclosure, such lawsuits could have a dramatic impact on the Reno market, IMHO. Selfishly, as a prospective homebuyer, I hope that this is not a trend, or a significant one in any event….

  38. GreenNV

    The owner of Welcome Way is an attorney who, if I recall correctly, got some local press about this house. It went back to the bank in a deed in lieu on 4 Feb 2009, then on 14 April 2009 he recorded a Rescission to the DIL. The Rescission is a unilateral document filed by the former owner and not signed by WAMU. It claims $450,000 in damages, tripled to $1,350,000 based on Nevada’s anti racketeering laws. I believe he has filed a suit against WAMU. He is trying the same tactic on 620 Sunnyside, this time against Countrywide.

  39. REO Agent

    I have just read the toxic assets article. The author dismisses mortgage fraud with his mistaken analysis of arms length transaction.

    The part of the article about the attempt to buy the loan was incomplete. Did they follow or just mail 1 letter to B of A? Did they mail it to the correct person? Did they fill out the correct form? Did they put in the required documentation? How many missaddressed, incorrect forms do you think B of A gets each day, 10,000 or more?

    The real estate agent does not set the price. There are numerous brokers price opinions done. In the past 6 months there has been 1 sale on Lakeridge. It was for $320,000. It is a much smaller house. There are currently 10 homes listed for sale. 2 of them are much bigger and are listed for $500,000.

    The real estate agent prepares the property for sale and lists it when they are instructed to do so by the bank. The house is usually on the banks website with the agents name and contact info before the sale. Many people contact the agent and ask to be informed when the listing is official. Many bank owned homes get multiple offers the first day.

    The article does not state what instructions were given the agent. Accept offers with a deposit is common. So is a copy of a lenders preapproval letter. Proof of funds is common. Once an offer is accepted, it is accepted. They cannot sell the same house twice. The article states that the bank was not accepting back up offers.

    The banks holding costs were not given, utilities, hoa fees, insurance, taxes, maintenance, etc. We are still in a declining market. The bank may have decided to do a quick sale and priced it accordingly.

  40. John Hein

    I’m considering buying a new home (or newer home in excellent condition) in Somersett and looked at Lakemont Canyon Pines homes which seemed fine. However it seems the company may be having financial difficulty in other developments. There website is no longer accessible. Can anyone give credible advice about this Builder? A quick web search provides very little info.

    Thanks,

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