Foreclosure and distressed property topics

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<p>Sorry Graph, what I meant was peak monthly NODs during Q1. iow, the largest monthly NOD amount for either Jan, Feb or Mar.</p>

<p> </p>

<p>As for my funky math, I was doing a back of the envelope guess at were NODS will peak out at. Basically, I estimate Option ARMs and to a smaller extent ARMs are going to default at an 80% rate. That's default, not necessarily foreclose. That's too high, but makes up for other loans defaulting too. Looking at 2005 as peak year, you see that 2008 is 28 months plus reset and three or more missed payments ago. </p>

<p>Therefore, given my rough memory that 2/3rds of the loans were being chosen we're Options-ARMs/ARMs. I take the average monthly volume in 2005, ~4000 home sales/month and go 4000*0.8*.66= or guessitimating peak busy months at 4500 sales per month, get roughly 2250 back of the envelope. That seems too low, I know SD well exceeds that.</p>

<p>What will be interesting is if the NOTS conversion rate follows a similar pattern as San Diego. If you look at NOTS to NODs 120 days prior, the conversion rate in San Diego steadily climbed as NODs climbed. If you look at <a href="http://www.foreclosureforum.com/stats.html">http://www.foreclosureforum.com/stats.html</a> and compare August 2007's Trustee Deeds to April's NODs, you see it's near 60%. April's NODs become August's auctions. You trace it back to late 2006 and it's closer 30%.</p>

<p>That, IMHO, is what Irvine and OC has to look forward too. The NODs will plateau probably in the mid 2000s, but the NOTs will soar to 50-60% of NODs resulting 1400-1500 NOTs a month eventually. Maybe summer.</p>
 
cdm,





In the first 15 business days of January, there has been 1608 NODs, 107.2 per day. If this rate holds about the same, then there will be over 2200 NODs for the month. On the foreclosures, there has been 572. And, if that rate holds, then January will see a new monthly record.





NSR,





If I look back 120 days to July, the NODS were about 1171, and the December NTSs/NOTs were 1111. Ouch! I haven't been tracking the NTSs as much, but they have ramped up big time. If I take the NODs to foreclosures from last year, then the ratio is at 50%. If that ratio holds, BTW it has been increasing, OC will see over 4000 foreclosures in the first six months of 2008. That will be worse than the first half of 96, and possibly worse than the second half of 96, the two worst halfs on record.
 
<p>Yesterday I tormented a foreclosure mill atty.</p>

<p>Having learned from Tanta the importance of having a chain of endorsements on the back of the note, I argued at final summary judgment that even though we had an assignment and had the note original (which they usually lie and say they lost), there was only one asgt with the note and it wasn't in favor of the foreclosing plaintiff, but somebody else entirely. The judge didn't grant summary judgt and set it for hearing for another 2 months. That will take it out for a year.</p>

<p>I pointed this stuff out 7 months ago, but the foreclosing attys don't understand the difference between a note and a mtg.</p>

<p>The opposing atty was really mad.</p>

<p>Henh, henh. </p>

<p>By the way, I have been begging the owner to sell the entire time. When we first started, she had plenty of equity. Now I don't know. . . She hasn't been willing to re-fi for the interest rate she could get.</p>

<p>She better settle for something, because I am going to start to charge big fees.</p>
 
<i>"I pointed this stuff out 7 months ago,"</i><p>


Since I am amazing ignorant on legal stuff, please 'splain to me; Why would you point out to the other side a flaw in their case? Why wouldn't you just wait until the judge hears it so you can waste as much of the other sides time as possible?
 
<em>Since I am amazing ignorant on legal stuff, please 'splain to me; Why would you point out to the other side a flaw in their case? Why wouldn't you just wait until the judge hears it so you can waste as much of the other sides time as possible?





</em>I am going on wild guess here, but I think have watched enough law related TV shows to have a good guess, but attorneys love to tell the opposing attorney... hehehehe... see... I told you so. I mean, isn't that a required class in the third year? I think it is called haha told you so 101.
 
<p>If you're not going to roll over and play dead and get defaulted and have the client kicked out right away, you have to respond to the complaint in some non-trivial way. You have to either file a "motion to Dismiss" or an "Answer".</p>

<p>I usually file a Motion to Dismiss first. This means that the Plaintiff did not state a "Cause of Action". Nowadays the Plaintiffs all lie and say they've lost the note. My take on Florida law says, you can assert that and reestablish the note, BUT you have to say how it got lost and what you did to find it. Say your note vault got burned down etc, etc. They never do, because they really haven't lost it. Also, you have to attach your documents. Lots of times they don't. I've even seen them attach docs from Suzy Smith's note, when Jose Diaz is being foreclosed. Or, not even a copy of the note; just a summary, which was clearly wrong, because the mtg was attached, and it had an adjustible note rider, whereas the summary was only for a fixed. I've also had one case where the mtg is the wrong form--for a title theory state like California, which doesn't even talk about judical foreclosure.</p>

<p>There is not one single case where I had to look the client in the eye and say I'm not taking your money, because they did everything right. The level of sloppiness is truly amazing.</p>

<p>So in order to file a convincing Motion to Dismiss, you have to point out these flaws. Unlike tv, most of what happens in NOT in the courtroom. It's pre-trial bucking and weaving. Anyway, in foreclosures you don't start even up with the other side. After all, your client hasn't been paying. You have to hit them with all your big guns.</p>

<p>I win the Motions to Dismiss about half the time. Then the judge gives them time to file an Amended Complaint. Usually takes a while. That's fine with me. Then we go thru the whole thing again. I have been known to win a second time. They file a 2nd Amended Complaint.</p>

<p>Then I have to answer, which means you deny whatever is deniable, and if you have any actual reason to file an Affirmative Defense you can. Then they can file their Motion for Summary Judgment, at which time I lose, but not always. I've won 3 or 4 recently. If you can dredge up an issue of law or fact, you can go to trial. Tanta's note endorsement thing is a real help here.</p>

<p>I've concluded that the reason they say that they've lost the notes is because there is no chain of endorsements from the original lender to the present Plaintiff. There wasn't in my recent case. Of course, they can go back and have everybody sign, but that would mean WORK for the lenders, and they don't have the personnel.</p>

<p>Sometimes I do hold a little something back. In this recent one, they did produce an assignment of mortgage, but I think that the person who assigned it had no automatic authority under Florida law, and there's no corporate resolution authorizing the person to do so. So I will throw that in in a week or so, more monkey wrenches in the system.</p>

<p>In the meantime, my client is trying to re-fi, which is very hard these days. </p>

<p>I have yet to have a client come in where there is even a convincing whiff of "predatory lending". I would love to have a chance at that. That might be a real defense.</p>

<p>I have actually won a foreclosure case once, but that was a non-institutional lender involving a balloon mortgage, without the appropriate language, and not something that happens much.</p>

<p>I charge a small flat fee, up in front, because I really don't do much work. The lenders all make the same mistakes. Summary Judgment is a 5 minute thing. The one I won paid some extra because I've kept it going since she hired me in March 2007. And she's going to have to pay a lot more shortly. I think she's expecting to get more favorable terms than is possible.</p>

<p>I've had several people who don't seem to realize that they have their backs to the walls, and are desperate, and not in a position to argue about lowering the rate a half a point.</p>

<p>This is long. But well, you asked.</p>

<p>TV is not an accurate portrayal of what goes on. Trials are boring to watch. Attorneys here anyway, spend a good deal of time cooling their heels waiting at "motion Calendar" for their turn. I waited an hour and a half to be heard on that hearing. You can't really work on something else because no matter how much you've prepared, or that you don't care that much (which I didn't in this case, because I think the client should have re-fied by now; in fact I found someone to do the job, but it was at a high rate), you are still nervous.</p>
 
<p>Don't know if this one has all ready been tallied, it's on the Wilshire Mortgage website (they have a new link now - titled "Homes for Sale") LOL. </p>

<p>I also thought this blurb was funny: <em>"Wilshire Credit Corporation is determining <strong>whether it will be able</strong> to adopt the Bush plan in the near future". </em>I mean, do they really have a choice ? <a href="https://www.wcc.ml.com/SpecialAnnouncement.aspx?id=1">Wilshire Mortgage Payment Center</a>


</p>

<p><u>FORECLOSURE</u>: Irvine SFR 699K Don't know the street, I suppose you could call the realtor. <a href="https://www.wcc.ml.com/Homes_Detail.aspx">Results for CA</a></p>
 
What a way to start the new year, but with record NODs and foreclosures!





NODs 2128, or 101.3 per day, and an increase of 16.8% from last month.





NTSs 1185, or 56.4 per day, and a decrease of -3% from last month.





Trustee sales 824, or 39.2. and an increase of 18.1% from last month.





Just how bad are the trustee sales? Comparing the worst month on record in 96, there was 1 foreclosure for 832 owner occupied homes in OC, and in 2008, it is 1 foreclosure for 746 owner occupied homes.





How about adjusting for household population? Will it look better that way? In 96, there was 1 foreclosure for 3903 people, and in 2008, it is 1 foreclosure for 3706 people. Well... it looks like it is worse than even the worst month on record. Considering NODs are double than what they were a year ago, and nearly double from the average of last year, then I suspect it will only continue to get worse. Since the ratio of NOD to foreclosure is about 50%, then 2008 could bring a month with a 1000+ foreclosures. This is starting to get really ugly, really, really fast.





Today, 41 homes went back to the bank at the Santa Ana courthouse. Some of the lenders still do not get it, and they are holding tight to what the NTS amount is. However, there are many lenders that do get it. There are more, and more lenders discounting the minimum bid $100k-$200k below the NTS amount.





<a href="http://www.zillow.com/HomeDetails.htm?zprop=63113659">My favorite foreclosure of the day</a>, went back to the bank for $1.65mil, with a NTS amount of $2.11mil, a $460k discount from the amount owed on the loan. I thought Newport Coast, and the high end was immune? This place is so new, that zillow only has one satellite photo of a completed home, and that is if you click on west.





There weren't any homes that went back to the bank in Irvine today, <a href="http://www.zillow.com/HomeDetails.htm?zprop=25506539">but this one in Tustin Ranch did for $882k</a>. It sold for $610k in 2001, and someone shut off the ATM.
 
When do you think these numbers will peak, and at what level?





My crystal ball says foreclosures will peak in mid 2010 at levels 3 times higher than the 1996 peak. The wildcard in all this is the number of people who walk away even if they can make the payments. If everyone realizes they are 30% underwater and just chooses to walk (which is very possible) the foreclosures could see a massive spike followed by a quick normalization. However, if people tough it out and wait for their ARM to explode, the peak will not be as high, but the foreclosure problem will get dragged out much longer. I don't think either scenario changes the total number of foreclosures -- there will be many -- but when these foreclosures occur.
 
To be honest, I have no idea. The rate at which they are increasing, and the rate they are breaking records, is unprecedented. In the beginning of the year, I thought we would see 92 like numbers, but we shot through that before the second quarter of the year. I read an article from the 90s on foreclosures, and Adibi and Chapman were going to try to create an economic model for predicting foreclosures. I dunno, if they ever created that model, but if they did, then they would have to change the model completely after this. It would be great if there was an economic model for this, but it became a lot more complicated in this bust, and maybe one day someone will be able to create the model for it.





My optimistic side says, it will peak in 2009, near 3 times higher than 96. This is the quick flush of the system perspective. But, the pessimistic side says, it will not peak until 2010 or 2011. The reasoning behind the pessimistic side, is this time it is different. In 95 and 96, then the government told the banks to speed up the foreclosure process, and they did, and it went from 9 months to a year to about 6 months for the foreclosure process. I have a quote from John Karevoll of DataQuick, from 96 on this. Delaying this process will only make it hurt more later.





BTW, my NOD number was premature, the total is 2156, or 103 per day, and 18.7% higher than last month.
 
<p>As of today, Coutrywide has 4243 REO's on the books in California. Here is the breakdown.....<a href="http://www.countrywide.com/purchase/f_reo.asp">Properties Owned by Countrywide - REO Homes</a></p>

<p>Orange: 10, Huntington Beach 6, Irvine 4, Tustin 2, Ladera Ranch 2, Laguna Beach 1, Laguna Hills 4, Laguna Niguel 4, Lake Forest 7, Buena Park 8, Anaheim 33, Anaheim Hills 1, Newport Beach 1. </p>

<p><u>Orange:</u></p>

<p>2529 Falconer Way 92867 PUD $909,900, <strong>2160 N. Pami Circle 92867 SFR $473,900,</strong> 402 N. Christine St 92869 SFR $436,900, <strong>404 E. Wilson Ave 92867 SFR $449,900, </strong>188 S. Esplanade St #4 Condo 92869 $314,900, <strong>2525 N. Bourbon St. # E2 92865 Condo $289,900,</strong> 531 S. La Veta Park Circle # 247 92868 Condo $221,900, <strong>554 N. Thomas St 92869 SFR $529,900</strong>, 5925 E. Yorktown Cir 92869 SFR $638,900, <strong>8224 E. Thistle Court 92869 PUD $652,900.</strong></p>

<p><u>Huntington Beach:</u></p>

<p>1212 Delaware St 92648 SFR $989,900, <strong>19745 Keswick La 92646 PUD $339,900</strong>, 19914 Keswick La 92646 Condo $287,900, <strong>525 18th St. 92648 SFR $799,900,</strong> 614 Huntington St 92648 $649,900, <strong>9902 Dragon Cir 92646 SFR $726,900.</strong> </p>

<p><u>Irvine:</u></p>

<p>25 Heathergreen 92614 Condo $535,900, <strong>3 Woodleaf 92614 Condo $399,900</strong>, 322 Quail Ridge 92603 Condo $479,900, <strong>3439 Watermarke Place 92612 Condo $333,900.</strong></p>

<p> </p>
 
<p>continuing -</p>

<p><u>Tustin:</u></p>

<p>1881 Bryan Ave 92780 SFR $634,900, <strong>663 W. 6th St. 92780 SFR $289,900</strong>.</p>

<p><u>Ladera Ranch:</u></p>

<p>12 Agave Court 92694 Condo $424,900, <strong>5 Fieldhouse Dr. 92694 Condo $560,000</strong>.</p>

<p><u>Laguna Beach</u>:</p>

<p>31612 Summit Rd. 92651 SFR $807,900.</p>

<p><u>Laguna Hills:</u></p>

<p>24314 Val Verde Court # 220 Condo $331,900,<strong> 24542 Linda Flora St. 92653 SFR $579,900</strong>, 25762 Via Lomas # 99 92653 Condo $298,900, <strong>26682 Bridlewood Dr. 92653 SFR $864,900.</strong></p>

<p> </p>

<p> </p>
 
<p>continuing - </p>

<p><u>Laguna Niguel:</u></p>

<p>25055 Calle Playa # H 92677 $327,900, <strong>28250 Via Marcus 92677 Condo $451,900,</strong> 29121 Via Cerrito # 31 92677 $269,900, <strong>31591 E. Nine Drive 92677 Condo $379,900. </strong></p>

<p><u>Lake Forest:</u></p>

<p>25745 Brookmont 92630 PUD $584,900, <strong>43250 Lookabout Rd. 93532 SFR $259,900</strong>, 23162 Tulip St. 92630 SFR $559,900, <strong>23182 La Vaca St 92630 SFR $524,900</strong>, 23832 Boeing La 92630 SFR $574,900, <strong>24391 Blueridge Rd 92630 SFR $528,900</strong>, 24731 Penfield St. 92630 SFR $524,900.</p>

<p><u>Anaheim Hills:</u></p>

<p>6405 E. Via Arboles 92807 SFR $1,299,000</p>

<p><u>Buena park</u> has 8, <strong>Anaheim has 33.....</strong></p>

<p><strong></strong></p>
 
Graphrix <a href="http://tinyurl.com/2s752f">called it:</a><strong>





Defaults, foreclosures reached record highs in January</strong>


"The number of residential mortgage defaults and foreclosures in Orange County shot up in January, with figures for both categories at their highest since DataQuick began tracking them.





The number of O.C. homeowners receiving notices of default in January was 2,352, up 24% from December and up 178% from January 2007. It’s the highest since DataQuick began tracking notices of default in 1992.





The number of foreclosures in January spiked to 802, up 25% from December and 424% from January 2007. It’s the highest since DataQuick began tracking foreclosures in 1988."


...
 
There was a little error in the text of Matt's blog, so here is what I posted there...


<em>


To be sure, foreclosures account for a small percentage of total housing stock in O.C., which has increased by tens of thousands of homes since the last downturn of the 1990s.</em>

<p>Um… the owner occupied (keep in mind, DQ’s foreclosure numbers are for owner occupied housing) housing stock at the end of 1996 was 560,753, and in 2007 it was 614,815. The record foreclosure month was October 1996, with 674, and now the record is 802. </p>

<p>That is…</p>

<p>1 foreclosure for every 832 homes in 1996.</p>

<p>1 foreclosure for every 767 homes in 2008.</p>

<p>The way the NOD, and NTS numbers keep increasing, then it will be pretty easy for 2008 to shatter the foreclosure record of 1996.</p>

<p>And, just think… there was job growth in 1995 and 1996. 2007 didn’t look so great, and if the likely trend continues, then 2008 won’t be that great either.</p>
 
<a href="http://calculatedrisk.blogspot.com/2008/02/sacramento-foreclosures-nearly-equal.html">Sacramento: Foreclosures Nearly Equal Home Sales</a>

<p>From Jim Wasserman and Phillip Reese at the SacBee: <a href="http://www.sacbee.com/749/story/713187.html">Sacramento region foreclosures nearly equal home sales in January</a> (hat tip Jesse) </p>

In the most ominous indicator yet of the Sacramento region's struggling housing market, January saw nearly as many people lose their homes as buy them.





January's 1,815 closed escrows in Amador, El Dorado, Nevada, Placer, Sacramento, Yolo and Yuba counties was only 33 more than the 1,782 foreclosures recorded in the same counties that month, according to statistics from La Jolla-based DataQuick Information Systems of La Jolla and Foreclosures.com. of Fair Oaks.


...


The foreclosures -- more than 10,000 last year in the eight-county capital region -- are fast pushing down home sales prices.


...


Sacramento County's median sales prices for all new and existing homes are down a record 26.8 percent from January 2007, the firm reported. The county's $253,000 median sales price is down now 34.6 percent from an August 2005 high of $387,000. We have to be a little careful using median home prices, since the mix of homes matters. But clearly foreclosures are impacting prices in the Sacramento region.
 
<a href="http://calculatedrisk.blogspot.com/2008/02/downey-financial-non-performing-assets.html" linkindex="375" set="yes">Downey Financial Non-performing Assets</a>

<p>From the Downey Financial <a href="http://www.sec.gov/Archives/edgar/data/935063/000093506308000007/k021508_8kexhibit.htm%3Cbr%20/%3E" linkindex="376">8-K released </a>today.





</p>







<a href="http://bp0.blogger.com/_pMscxxELHEg/R7XG0mjX_XI/AAAAAAAABms/No1Ej6Ys2nY/s1600-h/DSLJan2008.jpg" linkindex="377" set="yes"><img border="0" src="http://bp0.blogger.com/_pMscxxELHEg/R7XG0mjX_XI/AAAAAAAABms/No1Ej6Ys2nY/s320/DSLJan2008.jpg" alt="Downey Financial Non-Performing Assets" style="border: 1px solid rgb(0, 0, 0); margin: 10px; float: left;" /></a>

<em><strong>Click on graph for larger image.</strong></em>





This would be a nice looking chart, except those are the percent non-performing assets by month.





Yes, by month!













Update: Tanta wrote about DSL's mods-as-NPA issue in the comments to this post: <a href="http://calculatedrisk.blogspot.com/2008/01/downey-restates-npas.html" linkindex="378">Downey Restates NPAs</a>
 
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