REOs will rise 50% in the next 4 months.

NEW -> Contingent Buyer Assistance Program
[quote author="freedomCM" date=1255397825]A study by Fitch Ratings found that 46% of option ARMs were 30 days past due last month, even though just 12% of such loans have reset to higher monthly payments.</blockquote>


What you mean is sit back,relax and enjoy more fall in prices?
 
[quote author="freedomCM" date=1255409794]depends on whether you are drinking the NAR happy juice, or not.</blockquote>


No I am not.
 
<a href="http://mortgage.freedomblogging.com/2009/10/13/foreclosures-lowest-in-four-months/19539/">DataQuick came out with their foreclosure numbers today</a>. While the headline was rosy, the REOs once again exceeded REO sales, further increasing the shadow inventory and greatly increasing the months of inventory. Deny it all you want, the numbers speak for themself...



http://i36.tinypic.com/25aruqc.jpg
 
I love the good news (from CR):

<blockquote>First Federal Bank of California put out a press release claiming better modification performance than the national average:



Compared to the national average, far fewer loans modified by the Bank have defaulted as of August 31, the latest date for which there is comparative data. Just 28.3% of the loans modified by First Federal Bank of California in the first quarter of 2008 had become at least 30 days delinquent 12 months after they were modified. By contrast, that figure is 65.9% for national banks and federally regulated thrifts, according to a September report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.</blockquote>
 
28% default rate when 90% of the loans they modified weren't even delinquent. Ouch. Why in the world would anyone put out a press release to announce that?
 
from what i read in the commentary on CR, because they are trying to stay on the FDIC's good side so they don't get (deservedly) closed down.





Also: 80% of option ARM homedebtors are making the minimum payment option. To my understanding, that means that 80% of optionARMs will default.
 
[quote author="graphrix" date=1253901539]Irvine total including 3rd party investors 941. Excluding investors 900.



NODs = 450.



NTSs = 370.



Tustin total including 3rd party investors = 503. Excluding investors = 477.



NODs = 242



NTSs = 186



Orange total including 3rd party investors = 865. Excluding investors = 819.



NODs = 352



NTSs = 365



92705 (This includes some crap from the ghetto of SA) total including 3rd party investors = 294. Excluding investors = 287.



NODs = 129



NTSs = 116</blockquote>


Irvine total including 3rd party investors 974. Excluding investors 925.



NODs = 447.



NTSs = 409.



Tustin total including 3rd party investors = 518. Excluding investors = 495.



NODs = 252



NTSs = 201



Orange total including 3rd party investors = 846. Excluding investors = 799.



NODs = 335



NTSs = 373



92705 (This includes some crap from the ghetto of SA) total including 3rd party investors = 273. Excluding investors = 266.



NODs = 106



NTSs = 122



Irvine and Tustin had increases overall. While Orange and 92705 had decreases overall, mainly in NODs. However, all of them had increases in NTSs. Anyone want to come up with a "kick the can down the road" foreclosure song?
 
<a href="http://www.ritholtz.com/blog/2009/10/strategic-non-foreclosure/">Barry posted some great data from LPS today</a>. Here are there conclusions:

<strong>

?Delinquency and foreclosure rates continue to hit new highs ?31 states have non-current (delinquency plus foreclosure) rates of 10%</strong> (California being one of them)



<strong>?Deterioration over the last six months is widespread nationally.</strong>



?The percentage of loans that were 60 or more days delinquent from current status as of prior year-end is the highest of the last four years and is dominated by the higher credit scores.

<strong>

?Deterioration ratios are above 300% and have trended upwards for the last two months ?expected to continue through year-end.</strong>



?While rolls rates into foreclosure are near or below their historical averages, volumes are close to all-time highs.



?Loans on payment plans increased dramatically, due mostly to the Home Affordable Trial Periods.



?Newly initiated home retention plans exceeded new foreclosures in Q2 2009 based on data aggregated for the OCC-OTS Mortgage Metrics reports.

<strong>

?Monitoring shadow inventories ?shadow Foreclosure and REO Inventories remain much higher than historical levels and growing.</strong>



?2009 production GNMA loans improved from 2007 and 2008 levels, however remain above pre-bubble 2004 levels.



?Production volumes remain strong and dominated by FHA/VA.
 
all that is well and good, but I'm pretty discouraged right now about the rate of conversion of all this delinquency to actual REO product that is for sale.



I really thought that (as the title suggests) there would be a steadily increasing supply.



Now, I'm thinking the REOs are the pig making its way down the python, and we are only at the shoulders.



Will it take another year to see much increase in inventory? Will it happen this winter?
 
[quote author="freedomCM" date=1256789331]all that is well and good, but I'm pretty discouraged right now about the rate of conversion of all this delinquency to actual REO product that is for sale.



I really thought that (as the title suggests) there would be a steadily increasing supply.



Now, I'm thinking the REOs are the pig making its way down the python, and we are only at the shoulders.



Will it take another year to see much increase in inventory? Will it happen this winter?</blockquote>


Winter would be a really stupid time to dump everything, although that doesn't mean they won't do it. If there is an en masse REO dump, I would guess next spring.
 
[quote author="freedomCM" date=1256789331]all that is well and good, but I'm pretty discouraged right now about the rate of conversion of all this delinquency to actual REO product that is for sale.



I really thought that (as the title suggests) there would be a steadily increasing supply.



Now, I'm thinking the REOs are the pig making its way down the python, and we are only at the shoulders.



Will it take another year to see much increase in inventory? Will it happen this winter?</blockquote>
The REO dump isn't coming this winter and if the banks keep postponing and canceling these auctions at the pace they are (90%+) then it'll be a while before most REOs ever make it out to the market. Extend and pretend baby and in the meanwhile the buyers that are looking to buy a home continue to be frustrated.
 
[quote author="freedomCM" date=1256789331]all that is well and good, but I'm pretty discouraged right now about the rate of conversion of all this delinquency to actual REO product that is for sale.



I really thought that (as the title suggests) there would be a steadily increasing supply.



Now, I'm thinking the REOs are the pig making its way down the python, and we are only at the shoulders.



Will it take another year to see much increase in inventory? Will it happen this winter?</blockquote>


Honestly, the purge won't start happening until Q2 2010, and more likely Q3. Q1 and Q2 will not be as plentiful due to vultures.
 
[quote author="graphrix" date=1256804721][quote author="freedomCM" date=1256789331]all that is well and good, but I'm pretty discouraged right now about the rate of conversion of all this delinquency to actual REO product that is for sale.



I really thought that (as the title suggests) there would be a steadily increasing supply.



Now, I'm thinking the REOs are the pig making its way down the python, and we are only at the shoulders.



Will it take another year to see much increase in inventory? Will it happen this winter?</blockquote>


Honestly, the purge won't start happening until Q2 2010, and more likely Q3. Q1 and Q2 will not be as plentiful due to vultures.</blockquote>
Graph, have you been out to the auctions lately? Or tracking the prices 3rd parties are paying for them? I've noticed that there are more people showing up to these auctions, especially would-be homeowners and because of that I'm noticing that the winning bid amounts have gone from the mid-to-high $200/sf range to the low $300/sf range.
 
[quote author="USCTrojanCPA" date=1256811683]Graph, have you been out to the auctions lately? Or tracking the prices 3rd parties are paying for them? I've noticed that there are more people showing up to these auctions, especially would-be homeowners and because of that I'm noticing that the winning bid amounts have gone from the mid-to-high $200/sf range to the low $300/sf range.</blockquote>


I've been tracking them, and I have noticed the same to a certain extent. There are plenty of deals in the +/- range of $200 a sqft. But... the vultures I speak of are a much larger pack than the solo vultures at the auction. Things are happening that are not happening at the auction.
 
It's a strange time. We see the numbers of REOs. But the current real estate market is not reflecting it. Feels like the quiet before the storm.
 
I just looked at what sold today at the auction, and what I would consider homes that would be "worth it" sold for low $200s a sqft. One place in Aliso sold for $265, but I may not have the correct square footage, I just used the lower footage of homes in that tract. It looks like there will be one less parking problem in Camden for a while, <a href="http://www.zillow.com/homedetails/1403-Mayfield-Way-Tustin-CA-92782/2138982443_zpid/">this one sold for $216 a sqft</a>. Not sure what homes you are using for your square footage numbers, but it doesn't look like it is a reality as a whole.
 
[quote author="graphrix" date=1256818570]I just looked at what sold today at the auction, and what I would consider homes that would be "worth it" sold for low $200s a sqft. One place in Aliso sold for $265, but I may not have the correct square footage, I just used the lower footage of homes in that tract. It looks like there will be one less parking problem in Camden for a while, <a href="http://www.zillow.com/homedetails/1403-Mayfield-Way-Tustin-CA-92782/2138982443_zpid/">this one sold for $216 a sqft</a>. Not sure what homes you are using for your square footage numbers, but it doesn't look like it is a reality as a whole.</blockquote>
I was only looking at SFRs and detached condos 3+ bedrooms in Irvine, Newport, and Tustin Ranch. I know there are plenty of sub $250/sf homes getting sold at auction outside of Irvine in places that I wouldn't mind living in at all, but that is just a reflection of the comp prices in those cities. For example, South Laguna Niguel SFR prices are around $280-$300/sf while Mission Viejo SFR prices are around $240-$260/sf so flippers will bid accordingly. I know there was a large home in the Tustin side of Columbus Grove (North of Warner) that went back to the bank for around $240/sf might should have been picked up by someone (opening bid was around $750k area).
 
[quote author="graphrix" date=1256817535][quote author="USCTrojanCPA" date=1256811683]Graph, have you been out to the auctions lately? Or tracking the prices 3rd parties are paying for them? I've noticed that there are more people showing up to these auctions, especially would-be homeowners and because of that I'm noticing that the winning bid amounts have gone from the mid-to-high $200/sf range to the low $300/sf range.</blockquote>


I've been tracking them, and I have noticed the same to a certain extent. There are plenty of deals in the +/- range of $200 a sqft. But... the vultures I speak of are a much larger pack than the solo vultures at the auction. Things are happening that are not happening at the auction.</blockquote>
So you are talking about big funds ($10M+) that go to the trustees and pick up 20-50+ properties from them after they've gone back to the bank?
 
<blockquote>Take Los Angeles, where bank-owned homes priced above $500,000 accounted for just 5% of all foreclosures sold in August. Those sales may be just the tip of the iceberg: Homes at that price bracket accounted for 35% of all bank-owned inventory at the end of September and 45% of all mortgages that were 90 days or more delinquent, according to LPS Applied Analytics.



Weak sales and rising inventory from bank-owned homes means that L.A. had an inventory to sales ratio for bank-owned homes of 62-to-1 for homes priced above $500,000. By contrast, the ratio is 15-to-1 for homes priced from $250,000 to $500,000, and three-to-one for homes selling for less than $250,000.</blockquote>




<a href="http://blogs.wsj.com/developments/2009/11/11/more-high-end-homes-headed-to-foreclosure/">wsj story</a>
 
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