The banks can normally issue a NOD 3 months after the first missed payment. Some mortgages reduce this to 2 months, and I’ve seen some hard money loans with no grace period at all. So if the banks are getting aggressive, you would expect the majority of current NODs to be for 2010 missed payments, right?
There were 33 NODs filed on Monday 3 May 2010. I can track the missed payment date for 27 of these filings (it depends on the format the Trustee uses). Of these 27, 8 were for 2010 missed payments, 13 for 2009, and 6 for 2008. I’ll post a full matrix below the fold for those who are interested in the nitty gritty. I know that one day does not make a trend, but it seems some of the shadow inventory has begun its journey to daylight.
The make-up of the NOD filings is changing dramatically. A couple months ago, close to 25% of filings were by HOAs for delinquent dues. That number has plunged to less than 5%. Can it be that we are reaching some sort of "bottom" where the owners who are going to default on HOA dues (and their mortgage as a corollary) already have?
| APN | Date Missed | Loan Amount | Address |
| 200-302-09 | ? | $340,000 | 6139 Valley Wood |
| 83-573-03 | 4/1/09 | $212,800 | 30 Runsak |
| 86-543-31 | 1/1/10 | $71,402 | 11013 Zeolite |
| 28-115-17 | 2/1/08 | $216,000 | 3130 Delna |
| 86-563-05 | 10/1/08 | $211,500 | 13042 Exinite |
| 402-373-10 | 6/1/08 | $492,000 | 2465 Tuscan |
| 4-151-55 | 8/1/08 | $392,000 | 2150 Sutro C |
| 516-113-11 | ? | $382,500 | 1335 Rincon |
| 26-702-11 | 10/1/09 | $222,400 | 3532 Brassie |
| 17-110-44 | 7/1/09 | $142,500 | 15375 Toll |
| 232-132-03 | 8/1/09 | $408,750 | 1738 Evening Rock |
| 234-512-24 | 7/1/09 | $229,800 | 2160 Falling Star |
| 550-272-11 | 10/1/09 | $200,000 | 11775 Desert Bloom |
| 534-171-05 | 10/1/09 | $308,000 | 9230 Benedict |
| 85-281-35 | 1/1/10 | $156,300 | 225 Jannie |
| 25-112-58 | 3/1/08 | $139,500 | 725 Jamaica #4 |
| 28-193-19 | 1/1/09 | $199,999 | 2865 Patrice |
| 8-011-21 | 7/1/09 | $201,832 | 525 Winston |
| 570-051-12 | 6/1/09 | $129,412 | 7890 Clarridge Point |
| 21-481-03 | 1/1/10 | $162,866 | 4485 Reggie |
| 89-193-03 | 1/1/10 | $163,377 | 7505 Robert Bank |
| 152-571-09 | 12/1/08 | $1,000,000 | 5910 Sunset Ridge |
| 560-013-07 | 1/1/10 | $155,100 | 7770 Key Largo |
| 508-211-04 | 7/1/09 | $238,000 | 6385 Maricopa |
| 140-802-02 | 11/1/09 | $368,191 | 541 Roseben |
| 11-264-01 | ? | $362,250 | 802 Lander |
| 13-421-09 | ? | $206,000 | 750 Capital Hill |
| 87-166-08 | ? | $66,386 | 3945 Bobolink |
| 1-312-02 | 10/7/09 | $138,801 | 3025 Kings Row |
| 12-211-26 | 1/1/10 | $232,000 | GSR |
| 142-200-18 | 2/1/10 | $650,000 | 1260 Springer |
| 19-041-31 | 1/1/10 | $300,000 | 1992 Plumas |
| 12-111-21 | ? | $35,000 (2nd) | 75 High |
Wondering
Mike any trends with regards to which banks are doing what with their defaults? For instance, does the majority of the “shadow” inventory belong to certain banks and the same for the 2010 missed payments or are they all scattered around?
SkrapGuy
So far the “owners” of 3130 Delna have had 28 months mortgage free living. With a little bit of luck, it will take the bank another 28 months to get around to recording the NOS. Then maybe another 28 months to an actual sale at the courthouse?
Don’t laugh people. There are thousands of NODs that have been missing in action for well over a year. The NOD gets recorded, and then vanishes into thin air. So far never to be heard from again.
Maybe these “homeowners” can manage to live mortgage free for 7 years.
One hell of a deal.
Raymond
Yep, Skrap. The time lag between default and NOD is only one part of the issue. Part two is the time lag between NOD and NOS, which as you correctly point out is often times well over a year. Part three is the time lag between the NOS and an actual foreclosure sale, which again is often times well over a year.
It is not hyperbole to suggest that it could be 2013-14 before this all flushes out, unless there is a significant stepping up by the banks of the extraordinarily slow fashion at which they have been proceeding up to now.
skeptical
7 years rent free almost makes that 50% haircut worthwhile.
Hard to hate Joe Sixpack, even though he just got back from vacation in Hawaii and has that fishing boat in the three car garage. After all, the banksters get bailed out time after time.
The only losers in the equation are folks like me — prudent savers that have invested conservatively, have outstanding credit ratings, and a substantial down payment. House prices remain unreasonably high for folks like that, in part do to the shadow inventory that allows Joe to keep up his posh lifestyle.
Cheers, Joe! Since that missed payment in 2008, we hardly knew ye!
billddrummer
To Mike,
Great job data mining. I wish I had that kind of time.
To Wondering,
The volume of NODs seems to be tracking with the volume of loans in general. So Bank of America (BAC) and its Countrywide portfolio seem to represent a large proportion of the NOD volume, in concert with its market share.
You can’t really tell who has the ‘shadow inventory’ because those properties have no filings against them–hence the nomenclature ‘shadow inventory.’
I have a story to tell about one of the filings mentioned above. The NOD on 5910 Summit Ridge, APN #152-571-09, refers to a deed of trust recorded 3/21/05 and modified 6/2/06. Well, BAC already foreclosed on this deed of trust with a trustee’s deed recorded 1/4/10 for $798,750!
So BAC filed an NOD on a property it already owns.
Told you they were having trouble handling the volume, didn’t I?
Gary
Could anyone give me an honest opinion on
MLS 100003220
geopower
just for fun, a nice visualization of how we got into this mess in the first place:
http://crisisofcredit.com/
GreenNV
wondering, it is pretty much impossible to tell what the individual banks are doing. You can track who the original loan was with, but the NODs are typically filed by the loan servicer – you can’t tell if the loan has been sliced and diced and sold. You usually can tell on the Trustee’s Deed document, but the information is moot by then.
billdd, Summit Ridge looked odd to me, too. At least two of the 2008 defaults are by people who tried to sue the bank for fraud and to produce the actual loan documents – remember that scam? At least it delayed things for a couple years.
Gary, Fairway Vista looks about right to me, maybe $5K high. Go to the Assessor’s site and just enter the street name, then check out the most recent transactions. Red flags – single mom owner (I’ll catch hell for that!), HOA liens since August 2008, animal cage in the listing photos, and that weird curtains/blinds arrangement in the photos could indicate a problem. It could be an error, but the Assessor only shows this as a 2 bedroom unit. (if you had posted your comment with a real email address, I could have given you a more detailed run down)
Gary
Green my email is : renonv81@yahoo.com
Appreciate your input immensely!!
inclinejj
The people who are making the real big money out there are the people who are buying the non performing notes at fire sale prices.
I was talking to major lender the other day and what he told me was very interesting.
He said if the banks and the Gov’t got together and cleared out all the bad loans this crisis could have been contained in 2 years.
Ok a company that this lender bought designed the Lend Safe program that can not only figure out the chance of default but other things as well.
The good full doc loans got handed off to the retail loan agents to refinance. The dead loans that where stated or no doc got sold off for fire sale price. Being the lender involved is still servicing you will never find out who the investor was who bought the note.
Now we are seeing a flurry of loans being put in nod and notice of trustee sale from these lenders.
The second wave of foreclosures has started and no one knows how many more waves are out there.
Also the coming commerical loan defaults are going hit the banks hard. Very Hard.
billddrummer
To inclinejj,
I’m not surprised at all about the conversation you had with a big lender.
And as far as commercial loan defaults–they are already happening.
Thinly financed developers are having the worst time of it, but industrial, office, retail and other commercial properties have seen falling rents, rising vacancies, and thinner coverage.
I await commentary from Commercialender.
Wondering
Does anyone know of anyone that has been sued for deficiency judgements or if there is anyway to track these?
billddrummer
To Wondering,
Don’t know of anyone, and it would be hard to track without access to the district court records.
Perhaps an enterprising law clerk could research it for us.
DonC
inclinejj says “He said if the banks and the Gov’t got together and cleared out all the bad loans this crisis could have been contained in 2 years.”
Two years seems a tad optimistic. The last housing financial crisis was the S&L disaster. How long did it take to clean up those home loans? Ten years? Fifteen years? We’re about four years in and lenders still can’t figure out where the actual notes are. But it’s almost predictable that, having failed to maintain the basic paperwork, these guys would go all gushy over some software program that probably couldn’t predict the winner of the World Series after it was over.
Having said that, banks will take some hits but overall they seem well positioned. Basically borrowing at .25% and lending at 3.5%+ is not exactly a recipe for becoming unprofitable. Not sure if you’ve seen this, but anecdotally the banks do seem to be aggressively enforcing commercial loan covenants. Not sure what is up with that.
inclinejj
Who was in charge of cleaning up the Savings & Loans? Our governement. They know tax and spend they are not in the lending and real estate reo selling business.
We currently serive over 80 loans. Not alot by bank standards but we have serviced up to 200.
We have our late payers who come in and make two months payments get behindn we call them and they come in and make a payment but for private lending considering we have not had a foreclosure in 2 years is pretty amazing.
I am always willing to roll over someone’s loan who pays decent. Decent in my business is less then 3 lates per year.
Remember when the banks get nervous they sit on the fence on their hands and do nothing. They also loan out credit card money at 20 percent.
Banks like to spread the risk around but the main problem was, when this first started the banks went into a denial mode for the first year or 18 months. Oh subprime is not a problem.
10 and 15 years ago we didn’t have the voodoo economics with MBS and AIG selling everyone bogus insurance policies on loan pools they never intended to pay off on.
The investors world wide got suckered in by a few big bouys to buy all these MBS’s.
A couple of my buddies run medium sized local banks and they never did subprime, scatch and dent lending, alt-a, or did many loans for commercial. One lender has not taken a property back in 17 years. The other took back one house the borrower could not finish.
Have you ever walked into a lenders office during the refiance boom. Not a mortgage broker or banker but a wholesale lender. It it not amazing that notes can not be found. One large mortgage banker would always fund and close the loans then get the review appraisals back 2 weeks later. OOOPSSS
These loans where sold so many times god only knows where the paper work is.
DonC
inclinejj — You seem to be saying that if some idiot walks into an accountant’s office with a shoebox of incomplete tax records it’s the accountant’s fault that the tax filing is delayed. I don’t think so. Like I said, we’re four years into foreclosures and banks can’t locate notes or even prove what entity actually owns it. That’s hardly the government’s fault, particularly since AFAIK the government isn’t responsible for initiating the foreclosures.
The truth is that banking is a government created business — the government assures banks a stream of capital at rates below which they can lend it. It even creates public confidence in banks with programs like FDIC insurance. Absent this extensive government involvement, banking wouldn’t be a viable business.
However, just as a parent should never give their teenage son a Porshe, so the government should never just let its banking creation do what it wants. If it does, bankers will quickly stop the socially responsible activities — like providing capital to businesses and consumers — and start creating a big betting parlor, which is what the derivatives you’re complaining about are to a large extent.
Like Paul Volker has said, the biggest technological innovation in banking in the last fifty years has been the ATM. Stated alternatively, the only good banking is boring banking.
I never walked into a lending office during the boom. The tip off for me was when marginal salespeople could leave $80k-$100K jobs selling products they mostly understood and immediately start making $250K selling mortgage products they didn’t understand at all. You knew that couldn’t last. The other tip off that things were seriously out of whack was when the volume of derivative trading was 100x larger than the total volume of the underlying product. You knew that 99% of this trading was just irresponsible gambling with no socially redeeming value.
billddrummer
I just computed something that made my blood run cold.
This post showed 33 NODs filed on 5/3/10. Just for fun, I ran the average loan amount for the associated deeds of trust. I got $272,000.
Then, I looked at the number of NODs filed this year. Through 5/27/10, there have been just over 4,000 NODs recorded in Washoe County.
If you multiply the average dollar amount by the number of NODs, then over $1 billion (face value) of mortgages was 90+ days past due in the county.
(Now before you start assailing my logic, even if I discount the face amount by 20%, to represent principal paydowns since origination, and reduce the number of NODs filed by 30%, to account for HOA filings, multiple filings on the same property etc., that still leaves more than $600 million in nonperforming mortgage balances.)
$600,000,000 is a f**k of a lot of money.
And that’s just Washoe County, a small county with a moderate number of dwelling units.
How much is nonperforming nationwide?
And who’s fooling whom?
smarten
BillD – $600M isn’t a **** of a lot of money. That’s less than the county school district’s yearly budget! It’s the amount Obamacare is going to save over the next ten years.
And FWIW, you shouldn’t have taken the “average” loan amounts in default and then extrapolated. You should have taken the median.
billddrummer
To smarten,
When I take the average, I get $480 million outstanding, adjusted.
It stills seems like a lot of money.
But perhaps we’re jaded, and until the dollar amount is in the multiples of billions, it’s not relevant.
DonC
smarten — The purported savings is $635B not $600M. You’ve left off a few zeros.
bill — Mortgages in default are a little tricky to calculate. The full face amount is always a very big number, but the houses aren’t worthless so the losses would be much less than the face amount.
But yeah, housing is a very big industry, which is why it’s so weird that’s it still hasn’t been rationalized.
smarten
DonC – Thanks. I was trying to make a joke but you’re right; I left off a couple of zeros.
But maybe not. If you believe naysayers [and I do], when everything is said and done Obamacare is supposed to end up COSTING us $2B-$3B. So I was being generous when I projected $600M of “savings.”
billddrummer
To DonC,
You’re right about trying to figure the mortgage balances. I wasn’t attempting to predict the potential losses, merely looking at the gross dollar amount of past due loans.
Losses will be far smaller, not only because most of these loans won’t go all the way to foreclosure, but because, as you rightly point out, there is some value to the undelying collateral–even if that value is hard to peg right now.
Just an interesting data point.
inclinejj
This is too long to post but a very interesting read.
http://mhanson.com/archives/602