Foreclosure and distressed property topics

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Thanks, skek.



The saving grace is the guy has no equity in the property.

Under these circumstances, I don't think he has to even feel

one twinge of guilt. He did everything he was supposed to do,

and he has 2 "first" mtges. The oldest one will kick out the newer

one, if not paid. Meanwhile, why shouldn't he stay there for free

and save up for a down payment? I did advise him to keep paying the more

recent first for the next 3 months or so to see if this is resolved.



Lenders come into court all the time with mtges that are held

of record by somebody else (we're disregarding MERS), or with

assignments that have never been filed in the land records.



These unrecorded assignments are, in Florida, good between the

parties (the assignor and 'ee), but not 3rd parties. The borrower??

The borrower's atty (me) who has looked in the Court file? I then

have "actual Knowledge."
 
We could sue the title company/lawyer, and I'm sure we could get a judgment.



However, I doubt very much that we could collect on it. Remember the house of the defalcator

can't be taken away, because of homestead, unless you can track the ill-gotten gains directly to

the payment for the house. Very hard to impossible to prove.



And he has no equity right now, so hence no real loss, except to his credit. Which has already

happened.



He has one credit card that he pays before it accrues interest. He has 2 new cars with car

loans already approved, so really doesn't need any new credit for say, 4-5 years.
 
[quote author="lawyerliz" date=1209789017]...so really doesn't need any new credit for say, 4-5 years.</blockquote>


Call me crazy, but people with this type of "bad luck" tend to continue to have it and this bloke may very well need that credit sooner than that. Life happens. You can label it as karma, "law of attraction," ad nauseum... but in my experience it is moreso the rule rather than the exception that these things are a consistent pattern.
 
Nah, there are some people who cause these actions, I agree.



He doesn't strike me as one of them. He used this guy to close

when he purchased. Nothing bad happened. He didn't have any

other problems to share.



Are you going to tell me that the other 2 people who got caught up in

this, whom I know nothing about, also have "bad karma" or somehow

caused this?



When the game of musical chairs stops, someone doesn't get a chair.

Sometimes they didn't foresee, sometimes they are just at the

wrong place at the wrong time.



His credit is messed up until this is resolved anyway. Nothing we can

do about it, I don't think.
 
The foreclosure guesstimated numbers for April are worse all around compared to March on a per day basis. My numbers for NODs have been low compared to DQ's, and the foreclosure numbers have been high compared to DQ's. So, I admit I need to tweak my calculation. But, my margin of error is still below 10%, which is still better than the guberment's margin of error on new home sales. The numbers below are compared to my numbers of last month (March), and the percentages are on a per day basis using my numbers from last month as well. I will try to update the numbers with DQ's, when they release them.



NODs = 2311, or 105.1 per day, up 3.7%.



NTSs = 1843, or 74.8 per day. up 12%. This is significant, because this could be higher than the total sales number for April. March broke the resale home sales number, but the total home sales number would be a first, including the worst of the 90s.



Foreclosures = 926, or 42.1 per day, up 21.3%.



I have a feeling the DQ NODs will be closer to 2600, and the foreclosures will be closer to 850. Still, these will all be new records, and records even when adjusted for housing stock and on a per day basis. The increase in NTSs is scary, and reflects the higher NOD numbers from back in December and January. The numbers keep getting worse, and the May numbers have really started off on the wrong foot.



The bottom is no where to be seen, let alone be smelled, so don't be fooled.
 
I just pulled up the Nef Cortez list, and it looks like this month is the month of the Flipper Hill (aka "Quail Hill," aka "Quail Hell") implosion. There are a lot of QH condos up for auction.
 
Very interesting!



so graphrix is saying that 70% of NODs are going to NTS



while DQ is saying that only 30% of NODs are converting?





is there some methodological difference?
 
[quote author="Asteroid" date=1184223283]Thanks graphrix, very helpful!!... any suggestions about where to look for a good deal on a house, since REO's aren't providing any?</blockquote>


AZDavid is looking for some neighbors! :-)
 
<img src="http://d.yimg.com/us.yimg.com/p/ap/20080508/capt.89ab171ef5ef4fc8ab6dc50e5e603cf9.foreclosure_rates_gfx187.jpg?x=260&y=345&sig=tOat1VZDFUJzfW7.W8Z1Bg--" alt="" />
 
[quote author="IrvineRenter" date=1210328049]I don't see a leveling off in that chart. If anything, it looks like an exponential rise.</blockquote>


I think the correct term would be parabolic. Just wait until May, we will have to come up with a new term which is worse than parabolic.



160 Hayward, 92602 went back to the bank today for $485k, which is $90k below it's 1/2005 sale price.
 
[quote author="freedomCM" date=1210294591]Very interesting!



so graphrix is saying that 70% of NODs are going to NTS



while DQ is saying that only 30% of NODs are converting?





is there some methodological difference?</blockquote>


I am not sure where you got your 30% stat, and I am not saying you are wrong, but what I found was...



<em><a href="http://dqnews.com/News/California/CA-Foreclosures/RRFor080422.aspx">Of the homeowners in default, an estimated 32 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was about 52 percent. The increased portion of homes lost to foreclosure reflects the slow real estate market, as well as the number of homes bought during the height of the market with multiple-loan financing, which makes 'work-outs' difficult</a>.</em>



This is the opposite, and people who get out of foreclosure from the NOD, for California as a whole, is 32% and 68% going through the foreclosure. Also, the NTS is not the same as a foreclosure, and my estimated NOD to foreclosure ratio is 55%. Which takes the last 6 months of foreclosures, and the 6 months of NODs prior to that 6 month period.



Either way you look at it, it is awful, and worse than I ever expected. Now, if the NODS of the last 6 months were higher than the 6 months prior to that, then what do you think will happen in the next 6 months for foreclosures?
 
[quote author="graphrix" date=1210352048][quote author="freedomCM" date=1210294591]Very interesting!



so graphrix is saying that 70% of NODs are going to NTS



while DQ is saying that only 30% of NODs are converting?





is there some methodological difference?</blockquote>


I am not sure where you got your 30% stat, and I am not saying you are wrong, but what I found was...



<em><a href="http://dqnews.com/News/California/CA-Foreclosures/RRFor080422.aspx">Of the homeowners in default, an estimated 32 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was about 52 percent. The increased portion of homes lost to foreclosure reflects the slow real estate market, as well as the number of homes bought during the height of the market with multiple-loan financing, which makes 'work-outs' difficult</a>.</em>



This is the opposite, and people who get out of foreclosure from the NOD, for California as a whole, is 32% and 68% going through the foreclosure. Also, the NTS is not the same as a foreclosure, and my estimated NOD to foreclosure ratio is 55%. Which takes the last 6 months of foreclosures, and the 6 months of NODs prior to that 6 month period.



Either way you look at it, it is awful, and worse than I ever expected. Now, if the NODS of the last 6 months were higher than the 6 months prior to that, then what do you think will happen in the next 6 months for foreclosures?</blockquote>


There has been a lot of discussion, particularly on Calculated Risk. on the "walking away" phenomenon. IMO, the statistic that will be most telling concerning this phenomenon is the conversion rate of NODs to foreclosures. As homeowners sink deeper underwater, the conversion rate will almost certainly rise as people see the hopelessness of the situation and simply give up. The steep price declines of the last nine months should cause these conversion rates to reach very high levels and stay there for several years. I would guess that the very high rates we are seeing now will rise even higher when people start giving up hope of a rally. There is still denial in the market right now. The peak of the NOD to foreclosure conversion rate will represent market capitulation. I would expect to see it in late 2009 after next years spring rally fizzles.
 
I was reading an article in the LA Times last week about investors buying loans and then doing some kind of modification for the people and having it still be profitable. Anyway, somewhere in the article it said that a lot of the people had no interest in keeping the home. It's almost as if the stigma of being foreclosed on has diminished. To be honest, with the mess that some of these people are in, I almost can't blame some of them. $750K-$850K for a house that would sell today for $475K and the people don't have the income to support the price they paid.



Graph,



Why is harder to do a work out with a second? Are the second lien holders oblivious to the fact that their lien is absolutely worthless? It seems to me that a 2nd lien holder would be better off making some kind of modification rather than let it go to foreclosure as they will end up with $0.
 
What if the 2nd does a mod and the first goes into foreclosure? The 2nd is wiped out anyway and left some money on the table. If the first is low and affordable enough, it makes sense, but if the first is unaffordable, it isn't.
 
I guess I'm thinking more of the loans from 2006 and early 2007 where the value of the home is less than even the first mortgage, making the 2nd essentially worthless. If the first modifies the terms and the 2nd writes down most or all of their loan, it still seems like both lenders would be better off than if they chose to foreclose.



The house we bought in Paso had a first for $380K and a second for $208K and foreclosed in June. We bought it for $350K in Nov. The second got zero and the first was a big loss as they had property taxes, termite, 6% commission, maintenance and carrying costs. Had the second written down the loan to $20K and the first modified for 30 yr fixed at 5.75, I bet the guy would have kept it and both banks would have been better off. Unless there's something I'm missing about what the real costs are?
 
[quote author="stepping_up" date=1210371338]I was reading an article in the LA Times last week about investors buying loans and then doing some kind of modification for the people and having it still be profitable. Anyway, somewhere in the article it said that a lot of the people had no interest in keeping the home. It's almost as if the stigma of being foreclosed on has diminished. To be honest, with the mess that some of these people are in, I almost can't blame some of them. $750K-$850K for a house that would sell today for $475K and the people don't have the income to support the price they paid.



Graph,



Why is harder to do a work out with a second? Are the second lien holders oblivious to the fact that their lien is absolutely worthless? It seems to me that a 2nd lien holder would be better off making some kind of modification rather than let it go to foreclosure as they will end up with $0.</blockquote>


They are not oblivious, in fact they are so clued in, they could care less about the loans. I suggest reading <a href="http://www.housingwire.com/2008/05/06/second-liens-take-top-billing-at-treasury-pow-wow/">this article over at housingwire</a>. I would also check out some of the other articles on there about the seconds. This one has inside info that they are trading for $0.03 to $0.04 on the dollar. It costs more to print and file the docs on a loan mod than the loan is worth, let alone pay for the attorney to try to squeeze out any money the homedebtor doesn't have. Could something be done to save the home from foreclosure? Sure, but they don't have the staff to do it, or the money to pay them either.
 
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