Waiting to catch a wave? Surge of REO listings is unlikely.

NEW -> Contingent Buyer Assistance Program
[quote author="graphrix" date=1250687390][quote author="No_Such_Reality" date=1250670032]In 92503, 70 went back to the bank last month alone. I believe the DQ numbers [insert] <strong>do not</strong> [/insert] include court house auctions that successful go to third party. So it's 70 + whatever the investors sniped. So 60%+ of the July sales rate are being absorbed by the bank.</blockquote>


Did you type too fast, and mean that DQ only reports the trustee sales that go back to the bank? Because if you did, then Foreclosure Radar backs that up with 70 exactly. There were 11 investor purchases in 92503, and two of them are already listed. <a href="http://www.redfin.com/CA/Riverside/17374-Heights-Ln-92503/home/6338707">17374 HEIGHTS LN</a> and <a href="http://www.redfin.com/CA/Riverside/10969-Middleborough-Rd-92503/home/4762362">10969 MIDDLEBOROUGH RD</a>.

Can't help you on the MLS data for the land of the dirt people. But since it takes about 90 days for an investor to turn around a property, I might take a look at what was sold to investors 90 days before July.



92501 did have 18 go back to the bank, and zero that went to investors. That really is not a good sign.



The entire city of Riversas had 257 go back to the bank, and 42 that were sold to investors. Riversas county had 1944 go back to the bank, 326 that were sold to investors, and 4699 total sales.</blockquote>


No, I mean what I wrote. Which is not the opposite of what you wrote. Unfortunately I've heard so many explanations of what the DQ sales numbers include, I could be completely wrong. The 70 are the foreclosure radar numbers that the bank took back. They, to the best of my knowledge, are not included in the data quick monthly sale numbers. In addition to the 70 foreclosures that are now REOs, there may have been a few trustee sales (foreclosures) that someone bought on the court house steps. What I wrote is about the last line. You wrote about the prior line.



So here goes on what is included in the Data Quick monthly sales numbers, notepads ready? The categories:



A) Private Party sales to Private Party

B) Courthouse Trustee Sale (foreclosure auction) to Private Party

C) Courthouse Trustee Sale back to the Bank (becomes Bank REO)

D) Investor (a Private Party) owned foreclosure (the result of B days to months later) sale to a Private Party

E) Bank REO (result of C, months later) sale to Private Party



My understanding is that the DQ sales numbers are A+B+D+E but not C. It's possible that the monthly sales number do not include B or that they actually include all five. That was my question, does DQ's monthly sales numbers include the trustee sales that a private party buys on the courthouse steps. My question about the monthly sales was really how many of the 116 monthly sales are really group D.



As it applies to my previous note, that would mean the banks took 70 homes back via C (which are not included in the monthly DQ sales numbers) and some additional number of 'foreclosures' were sold to private parties at the courthouse and are counted in the 116 sales numbers.



For example, let's say item B above was 26 trustee sales and that those are included in the sale numbers (A+B+D+E). Then: the actual sales of homes as homes is only 90 (116-26) and for the month there would be 96 'foreclosures' (70 bank take backs + 26 'investor take backs). Making the situation such that there's really 90 home sales occuring for people to live in and 96 foreclosures occuring. IOW, world of hurt coming.



I'm assuming that all (or almost all) trustee sales that go to private parties are actually investors looking to flip.



Of course, I could be completely wrong, but please tell me that the monthly DQ sales numbers do not include the trustee sales that go back to the bank. That's too scary to think about because that means at most, there's 46 actual sales (116 -70) and there are 70+ 'foreclosures' per month.
 
[quote author="No_Such_Reality" date=1250755265]No, I mean what I wrote. Which is not the opposite of what you wrote. Unfortunately I've heard so many explanations of what the DQ sales numbers include, I could be completely wrong. The 70 are the foreclosure radar numbers that the bank took back. They, to the best of my knowledge, are not included in the data quick monthly sale numbers. In addition to the 70 foreclosures that are now REOs, there may have been a few trustee sales (foreclosures) that someone bought on the court house steps. What I wrote is about the last line. You wrote about the prior line.



So here goes on what is included in the Data Quick monthly sales numbers, notepads ready? The categories:



A) Private Party sales to Private Party

B) Courthouse Trustee Sale (foreclosure auction) to Private Party

C) Courthouse Trustee Sale back to the Bank (becomes Bank REO)

D) Investor (a Private Party) owned foreclosure (the result of B days to months later) sale to a Private Party

E) Bank REO (result of C, months later) sale to Private Party



My understanding is that the DQ sales numbers are A+B+D+E but not C. It's possible that the monthly sales number do not include B or that they actually include all five. That was my question, does DQ's monthly sales numbers include the trustee sales that a private party buys on the courthouse steps. My question about the monthly sales was really how many of the 116 monthly sales are really group D.



As it applies to my previous note, that would mean the banks took 70 homes back via C (which are not included in the monthly DQ sales numbers) and some additional number of 'foreclosures' were sold to private parties at the courthouse and are counted in the 116 sales numbers.



For example, let's say item B above was 26 trustee sales and that those are included in the sale numbers (A+B+D+E). Then: the actual sales of homes as homes is only 90 (116-26) and for the month there would be 96 'foreclosures' (70 bank take backs + 26 'investor take backs). Making the situation such that there's really 90 home sales occuring for people to live in and 96 foreclosures occuring. IOW, world of hurt coming.



I'm assuming that all (or almost all) trustee sales that go to private parties are actually investors looking to flip.



Of course, I could be completely wrong, but please tell me that the monthly DQ sales numbers do not include the trustee sales that go back to the bank. That's too scary to think about because that means at most, there's 46 actual sales (116 -70) and there are 70+ 'foreclosures' per month.</blockquote>


Ah... I get it now. I thought you meant that DQ was reporting 70 foreclosures, and you thought that did not include the foreclosures to third parties. Now that I reread it, you meant DQ's sales numbers.



Anyway, DQ uses grant deeds for their sale numbers. Whether it is a bank that takes a property back, or a third party winning the auction, both are considered a trustees deed, and they would not be included in their sales numbers. So it is A+D+E = sales.
 
Thanks, Riverside is pretty far out.



Let's bring it home. Or maybe near home.



North Tustin, 92705, aka Santa Ana...



Sales in July = 48.

Current listed REOs = 0.

Current Bank Owned REOs = 44.

Trustee Sales schedule in the next 30 days = 89



And just for giggles, Orange County in aggregate.

Sales in July = 3006

Trustee Sales scheduled in the next 30 days = 6356.



Hopefully more than 50% of the auctions will get postponed or there will be more auctions than July sales...
 
[quote author="awgee" date=1250748017]I am so confused.

Geotpf wanted numbers. Real numbers. Numbers of REOs vs REOS listed.

We gave him those numbers. In his location.

So why no response?

Geoptf is posting on other threads.

Why no response to the numbers showing how many REOs vs. how many REOs listed?

Is that not what he wanted?

Has Geoptf decided to ignore the facts since they do not fit his preconceived beliefs?









I for one am fascinated with market psychology, especially how strong it is.

I have a theory that out of all the factors influencing residential real estate, market psychology is the strongest. Stronger than interest rates, stronger than income to expense ratios, and stronger than "We want our kids to grow up in a good neighborhood."</blockquote>
It is psychology and emotion to lead to irrational financial decisions such as home purchases...and perception becomes reality very quickly in many people's minds.
 
[quote author="awgee" date=1250748017]I am so confused.

Geotpf wanted numbers. Real numbers. Numbers of REOs vs REOS listed.

We gave him those numbers. In his location.

So why no response?

Geoptf is posting on other threads.

Why no response to the numbers showing how many REOs vs. how many REOs listed?

Is that not what he wanted?

Has Geoptf decided to ignore the facts since they do not fit his preconceived beliefs?









I for one am fascinated with market psychology, especially how strong it is.

I have a theory that out of all the factors influencing residential real estate, market psychology is the strongest. Stronger than interest rates, stronger than income to expense ratios, and stronger than "We want our kids to grow up in a good neighborhood."</blockquote>


I am convinced, or at least confused. I still don't understand why banks would not sell houses they own. They have stopped the bleeding and price drops, but prices aren't going to come back up any time soon. The taxes and maintenance and other costs for owning a vacant house can be substantial, and they aren't going to get more for it in a year or three than if they sell it now. They aren't going to rent it out. So why don't they sell them?



I'm also curious as to why Jim the Realtor found a different story in San Deigo. Did he make a mistake?
 
I finally cleaned up my REOs vs. REO sales spreadsheet, so that hopefully everyone, other than just me, can understand it.



On the left are the REO sales numbers from the MLS compared to the REO numbers from DataQuick on a month for month basis. I broke down the total for both of them for each year. "Dif" is the difference between the sales and the REOs. A positive number means there were more REOs than there were sales and a negative number means there were more sales than REOs. Notice how it isn't until 2009 that the number is negative... and I would be willing to bet that in November it will return to a positive number. Also note that there are <strong>8076</strong> REOs on the banks' books using this method.



Over on the right I shifted the REOs four months ahead to reflect the 120 day average turn time of the banks. Notice that the "Dif" number never goes negative using this method. This puts us at 5769 REOs that are out there... somewhere... but they are there, and when I add in the current last four months of REOs (2712) the total with the current numbers is <strong>8481</strong>



Down at the bottom I took the last three month average of REO sales of 704, and calculated that 5769 REOs equals 8.19 month's worth of inventory, and the total REO inventory equals <strong>a year's worth of inventory</strong>.



http://i25.tinypic.com/dxzr5g.jpg



There's your shadow inventory biatches!
 
[quote author="Geotpf" date=1250764883][quote author="awgee" date=1250748017]I am so confused.

Geotpf wanted numbers. Real numbers. Numbers of REOs vs REOS listed.

We gave him those numbers. In his location.

So why no response?

Geoptf is posting on other threads.

Why no response to the numbers showing how many REOs vs. how many REOs listed?

Is that not what he wanted?

Has Geoptf decided to ignore the facts since they do not fit his preconceived beliefs?









I for one am fascinated with market psychology, especially how strong it is.

I have a theory that out of all the factors influencing residential real estate, market psychology is the strongest. Stronger than interest rates, stronger than income to expense ratios, and stronger than "We want our kids to grow up in a good neighborhood."</blockquote>


I am convinced, or at least confused. I still don't understand why banks would not sell houses they own. They have stopped the bleeding and price drops, but prices aren't going to come back up any time soon. The taxes and maintenance and other costs for owning a vacant house can be substantial, and they aren't going to get more for it in a year or three than if they sell it now. They aren't going to rent it out. So why don't they sell them?



I'm also curious as to why Jim the Realtor found a different story in San Deigo. Did he make a mistake?</blockquote>


Graphrix explained to you why they do not sell them. Go back and read his explanation on capital reserves. He can not keep repeating himself.

What zip code in Northern San Diego, where Jim the Realtor works, do you want the numbers from? See for yourself. You wanted the numbers and now that you get them, you are confused? Why?

What zip code do you live in where you will recognize the names of the streets? Or do you not want to know the truth?
 
[quote author="awgee" date=1250769830]Graphrix explained to you why they do not sell them. Go back and read his explanation on capital reserves. He can not keep repeating himself.</blockquote>


I really don't think that he does understand how capital ratios work, either that or he has just not read my posts. At first, I thought it was because he just didn't want to see it, but now I do think it is because he has no clue WTF I am talking about when I mention mark to market and tier 1 capital ratios.



BTW, awgee, I just looked into business banks, and Farmers & Merchants has rocking 24%-26% capital ratios. Guess where I will be doing my business banking? Not Citizens or Bank of the West... they have issues.



Anyway, <a href="http://www.reuters.com/article/marketsNews/idINN1946918220090819">Sheila Bair understands capital ratios</a>, and she has concerns what will happen when the banks bring some of their off balance sheet "assets" onto their balance sheets.



<em>U.S. regulators plan to gauge how severe of a hit banks will take from an accounting change that will force them to bring more than $1 trillion of assets back on their books.



Next week regulators expect to propose a rule that seeks input on whether banks need more time to build capital cushions against the assets that were once held by off-balance-sheet trusts.



Banks will still have to move the assets back on to their books on Jan. 1, 2010, but regulators want feedback on the impact of the accounting change and whether it might be prudent to phase in the risk-weighted capital that must be held against the assets.



The Federal Deposit Insurance Corp posted an agenda on its website on Wednesday indicating that regulators will propose on Aug. 26 the rule that seeks input.



Sheila Bair, chairman of the FDIC, acknowledged earlier this month that the change would be a tough hit for some banks and could derail the recovery of the securitization market, which helps lenders extend credit.



"We support the general direction of bringing all this back on balance sheet. But the timing ... still gives me some heartburn," Bair told the Senate Banking Committee.



Banks have traditionally used off-balance-sheet vehicles to avoid reporting requirements or to reduce the amount of capital they needed to hold to satisfy regulatory requirements. As the financial storm gathered, uncertainty about some of those vehicles helped undermine confidence in banks and accelerated the financial crisis.



The Financial Accounting Standards Board finalized rules earlier this year to force banks to move these obligations onto their books, and provide more disclosure than the footnotes that currently provide scant information to investors.



The impact of the change could be huge.



The Federal Reserve, during a recent "stress test" of the largest 19 U.S. banks, said the change could mean about $900 billion of assets being brought onto the books of those institutions.



Citigroup (C.N) said in a recent regulatory filing the rule could force it to bring $159.3 billion of assets back on its books, including $85.5 billion of credit card-related assets and $14.2 billion of student loans.



JPMorgan Chase (JPM.N) said it would likely have to add $130 billion of assets to its balance sheet, <strong>and said the change would decrease its Tier 1 capital ratio.</strong>



During the stress-test process, the Federal Reserve ensured that these largest institutions had large enough capital cushions to weather the change, but it could still affect their leverage ratios, and slightly smaller banks' capital levels could more dramatically change.



CAPITAL BLOW</em>
 
<blockquote>Banks will still have to move the assets back on to their books on Jan. 1, 2010</blockquote>


<object width="325" height="250"><embed src="http://www.youtube.com/v/youtube" type="application/x-shockwave-flash" width="325" height="250"></embed></object>
 
[quote author="graphrix" date=1250775447]JPMorgan Chase (JPM.N) said it would likely have to add $130 billion of assets to its balance sheet, <strong>and said the change would decrease its Tier 1 capital ratio.</strong>

[/i]</blockquote>


A ha! Now I understand why the banks are in 'amend and pretend' mode. They are going to do a "Kitchen Sink" moment in January.



<img src="http://www.andyfilm.com/2010-onesheet.jpg" alt="" />
 
[quote author="graphrix" date=1250775447][quote author="awgee" date=1250769830]Graphrix explained to you why they do not sell them. Go back and read his explanation on capital reserves. He can not keep repeating himself.</blockquote>


I really don't think that he does understand how capital ratios work, either that or he has just not read my posts. At first, I thought it was because he just didn't want to see it, but now I do think it is because he has no clue WTF I am talking about when I mention mark to market and tier 1 capital ratios.



BTW, awgee, I just looked into business banks, and Farmers & Merchants has rocking 24%-26% capital ratios. Guess where I will be doing my business banking? Not Citizens or Bank of the West... they have issues.



Anyway, <a href="http://www.reuters.com/article/marketsNews/idINN1946918220090819">Sheila Bair understands capital ratios</a>, and she has concerns what will happen when the banks bring some of their off balance sheet "assets" onto their balance sheets.



<em>U.S. regulators plan to gauge how severe of a hit banks will take from an accounting change that will force them to bring more than $1 trillion of assets back on their books.



Next week regulators expect to propose a rule that seeks input on whether banks need more time to build capital cushions against the assets that were once held by off-balance-sheet trusts.



Banks will still have to move the assets back on to their books on Jan. 1, 2010, but regulators want feedback on the impact of the accounting change and whether it might be prudent to phase in the risk-weighted capital that must be held against the assets.



The Federal Deposit Insurance Corp posted an agenda on its website on Wednesday indicating that regulators will propose on Aug. 26 the rule that seeks input.



Sheila Bair, chairman of the FDIC, acknowledged earlier this month that the change would be a tough hit for some banks and could derail the recovery of the securitization market, which helps lenders extend credit.



"We support the general direction of bringing all this back on balance sheet. But the timing ... still gives me some heartburn," Bair told the Senate Banking Committee.



Banks have traditionally used off-balance-sheet vehicles to avoid reporting requirements or to reduce the amount of capital they needed to hold to satisfy regulatory requirements. As the financial storm gathered, uncertainty about some of those vehicles helped undermine confidence in banks and accelerated the financial crisis.



The Financial Accounting Standards Board finalized rules earlier this year to force banks to move these obligations onto their books, and provide more disclosure than the footnotes that currently provide scant information to investors.



The impact of the change could be huge.



The Federal Reserve, during a recent "stress test" of the largest 19 U.S. banks, said the change could mean about $900 billion of assets being brought onto the books of those institutions.



Citigroup (C.N) said in a recent regulatory filing the rule could force it to bring $159.3 billion of assets back on its books, including $85.5 billion of credit card-related assets and $14.2 billion of student loans.



JPMorgan Chase (JPM.N) said it would likely have to add $130 billion of assets to its balance sheet, <strong>and said the change would decrease its Tier 1 capital ratio.</strong>



During the stress-test process, the Federal Reserve ensured that these largest institutions had large enough capital cushions to weather the change, but it could still affect their leverage ratios, and slightly smaller banks' capital levels could more dramatically change.



CAPITAL BLOW</em></blockquote>


I thought (but am probably wrong here, apparently), that once they foreclosed, they had to bring it on their books at the lower price, but if the loan was current, and possibly even just in default, they could value it at book value. I guess you are saying they don't have to do that until they actually sell the property. Personally, I think they should be forced to value everything at mark-to-market. But you are right I don't understand all the nuances here.



It's still stupid. The values of these properties will go down and costs will go up. A vacant house will eventually get trashed by vandals or damaged due to weather or pests, lowering it's value. Property taxes, maintenance, etc. will have to be paid.
 
[quote author="Geotpf" date=1250807471]



I thought (but am probably wrong here, apparently), that once they foreclosed, they had to bring it on their books at the lower price, but if the loan was current, and possibly even just in default, they could value it at book value. I guess you are saying they don't have to do that until they actually sell the property. Personally, I think they should be forced to value everything at mark-to-market. But you are right I don't understand all the nuances here.



It's still stupid. The values of these properties will go down and costs will go up. A vacant house will eventually get trashed by vandals or damaged due to weather or pests, lowering it's value. Property taxes, maintenance, etc. will have to be paid.</blockquote>


It is stupid, but if you're a bank with potential capital reserve issues you don't have a lot of options right now. If you have the option of pushing out the loss or being shutdown/taken over/nationalized. You're going to kick the can down the road as long as you can, right?
 
[quote author="Geotpf" date=1250807471][quote author="graphrix" date=1250775447][quote author="awgee" date=1250769830]Graphrix explained to you why they do not sell them. Go back and read his explanation on capital reserves. He can not keep repeating himself.</blockquote>


I really don't think that he does understand how capital ratios work, either that or he has just not read my posts. At first, I thought it was because he just didn't want to see it, but now I do think it is because he has no clue WTF I am talking about when I mention mark to market and tier 1 capital ratios.



BTW, awgee, I just looked into business banks, and Farmers & Merchants has rocking 24%-26% capital ratios. Guess where I will be doing my business banking? Not Citizens or Bank of the West... they have issues.



Anyway, <a href="http://www.reuters.com/article/marketsNews/idINN1946918220090819">Sheila Bair understands capital ratios</a>, and she has concerns what will happen when the banks bring some of their off balance sheet "assets" onto their balance sheets.



<em>U.S. regulators plan to gauge how severe of a hit banks will take from an accounting change that will force them to bring more than $1 trillion of assets back on their books.



Next week regulators expect to propose a rule that seeks input on whether banks need more time to build capital cushions against the assets that were once held by off-balance-sheet trusts.



Banks will still have to move the assets back on to their books on Jan. 1, 2010, but regulators want feedback on the impact of the accounting change and whether it might be prudent to phase in the risk-weighted capital that must be held against the assets.



The Federal Deposit Insurance Corp posted an agenda on its website on Wednesday indicating that regulators will propose on Aug. 26 the rule that seeks input.



Sheila Bair, chairman of the FDIC, acknowledged earlier this month that the change would be a tough hit for some banks and could derail the recovery of the securitization market, which helps lenders extend credit.



"We support the general direction of bringing all this back on balance sheet. But the timing ... still gives me some heartburn," Bair told the Senate Banking Committee.



Banks have traditionally used off-balance-sheet vehicles to avoid reporting requirements or to reduce the amount of capital they needed to hold to satisfy regulatory requirements. As the financial storm gathered, uncertainty about some of those vehicles helped undermine confidence in banks and accelerated the financial crisis.



The Financial Accounting Standards Board finalized rules earlier this year to force banks to move these obligations onto their books, and provide more disclosure than the footnotes that currently provide scant information to investors.



The impact of the change could be huge.



The Federal Reserve, during a recent "stress test" of the largest 19 U.S. banks, said the change could mean about $900 billion of assets being brought onto the books of those institutions.



Citigroup (C.N) said in a recent regulatory filing the rule could force it to bring $159.3 billion of assets back on its books, including $85.5 billion of credit card-related assets and $14.2 billion of student loans.



JPMorgan Chase (JPM.N) said it would likely have to add $130 billion of assets to its balance sheet, <strong>and said the change would decrease its Tier 1 capital ratio.</strong>



During the stress-test process, the Federal Reserve ensured that these largest institutions had large enough capital cushions to weather the change, but it could still affect their leverage ratios, and slightly smaller banks' capital levels could more dramatically change.



CAPITAL BLOW</em></blockquote>


I thought (but am probably wrong here, apparently), that once they foreclosed, they had to bring it on their books at the lower price, but if the loan was current, and possibly even just in default, they could value it at book value. I guess you are saying they don't have to do that until they actually sell the property. Personally, I think they should be forced to value everything at mark-to-market. But you are right I don't understand all the nuances here.



It's still stupid. The values of these properties will go down and costs will go up. A vacant house will eventually get trashed by vandals or damaged due to weather or pests, lowering it's value. Property taxes, maintenance, etc. will have to be paid.</blockquote>


Banks don't own a lot of houses (ie. REO'd already). They do however, own a whole lot of loans, which they are free to sell to other people in the best possible light ...



<A href="http://www.bloomberg.com/apps/news?pid=20601087&sid=an.54GOuVxe4">Mortgage-Bond Prices Reflect Errors, Amherst Says (Update2) </A>
 
[quote author="Anonymous" date=1250813256][quote author="Geotpf" date=1250807471][quote author="graphrix" date=1250775447][quote author="awgee" date=1250769830]Graphrix explained to you why they do not sell them. Go back and read his explanation on capital reserves. He can not keep repeating himself.</blockquote>


I really don't think that he does understand how capital ratios work, either that or he has just not read my posts. At first, I thought it was because he just didn't want to see it, but now I do think it is because he has no clue WTF I am talking about when I mention mark to market and tier 1 capital ratios.



BTW, awgee, I just looked into business banks, and Farmers & Merchants has rocking 24%-26% capital ratios. Guess where I will be doing my business banking? Not Citizens or Bank of the West... they have issues.



Anyway, <a href="http://www.reuters.com/article/marketsNews/idINN1946918220090819">Sheila Bair understands capital ratios</a>, and she has concerns what will happen when the banks bring some of their off balance sheet "assets" onto their balance sheets.



<em>U.S. regulators plan to gauge how severe of a hit banks will take from an accounting change that will force them to bring more than $1 trillion of assets back on their books.



Next week regulators expect to propose a rule that seeks input on whether banks need more time to build capital cushions against the assets that were once held by off-balance-sheet trusts.



Banks will still have to move the assets back on to their books on Jan. 1, 2010, but regulators want feedback on the impact of the accounting change and whether it might be prudent to phase in the risk-weighted capital that must be held against the assets.



The Federal Deposit Insurance Corp posted an agenda on its website on Wednesday indicating that regulators will propose on Aug. 26 the rule that seeks input.



Sheila Bair, chairman of the FDIC, acknowledged earlier this month that the change would be a tough hit for some banks and could derail the recovery of the securitization market, which helps lenders extend credit.



"We support the general direction of bringing all this back on balance sheet. But the timing ... still gives me some heartburn," Bair told the Senate Banking Committee.



Banks have traditionally used off-balance-sheet vehicles to avoid reporting requirements or to reduce the amount of capital they needed to hold to satisfy regulatory requirements. As the financial storm gathered, uncertainty about some of those vehicles helped undermine confidence in banks and accelerated the financial crisis.



The Financial Accounting Standards Board finalized rules earlier this year to force banks to move these obligations onto their books, and provide more disclosure than the footnotes that currently provide scant information to investors.



The impact of the change could be huge.



The Federal Reserve, during a recent "stress test" of the largest 19 U.S. banks, said the change could mean about $900 billion of assets being brought onto the books of those institutions.



Citigroup (C.N) said in a recent regulatory filing the rule could force it to bring $159.3 billion of assets back on its books, including $85.5 billion of credit card-related assets and $14.2 billion of student loans.



JPMorgan Chase (JPM.N) said it would likely have to add $130 billion of assets to its balance sheet, <strong>and said the change would decrease its Tier 1 capital ratio.</strong>



During the stress-test process, the Federal Reserve ensured that these largest institutions had large enough capital cushions to weather the change, but it could still affect their leverage ratios, and slightly smaller banks' capital levels could more dramatically change.



CAPITAL BLOW</em></blockquote>


I thought (but am probably wrong here, apparently), that once they foreclosed, they had to bring it on their books at the lower price, but if the loan was current, and possibly even just in default, they could value it at book value. I guess you are saying they don't have to do that until they actually sell the property. Personally, I think they should be forced to value everything at mark-to-market. But you are right I don't understand all the nuances here.



It's still stupid. The values of these properties will go down and costs will go up. A vacant house will eventually get trashed by vandals or damaged due to weather or pests, lowering it's value. Property taxes, maintenance, etc. will have to be paid.</blockquote>


Banks don't own a lot of houses (ie. REO'd already). They do however, own a whole lot of loans, which they are free to sell to other people in the best possible light ...



<A href="http://www.bloomberg.com/apps/news?pid=20601087&sid=an.54GOuVxe4">Mortgage-Bond Prices Reflect Errors, Amherst Says (Update2) </A></blockquote>


This was the argument I have been making (that the banks haven't REOed a lot of properties, that the real shadow inventory is in the pre-foreclosures that are in default but not taken back from the bank) throughout the thread. graphrix and others have said that this is wrong and I'm ignorant and stupid and not listening to them. So, apparently you are wrong and ignorant and stupid and not listening to them as well.
 
Geotpf...why does it have to be one or the other? What if it is both the number of REO's that Graph has listed up above that banks own and are not sold yet and IN ADDITION to that there is a massive amount of preforeclosures coming as well?



I understand there is a massive amount of preforeclosures out there that banks are purposely stalling on, but there is also a massive amount of homes the banks currently own that have not been sold yet.
 
[quote author="25inIrvine" date=1250816424]Geotpf...why does it have to be one or the other? What if it is both the number of REO's that Graph has listed up above that banks own and are not sold yet and IN ADDITION to that there is a massive amount of preforeclosures coming as well?



I understand there is a massive amount of preforeclosures out there that banks are purposely stalling on, but there is also a massive amount of homes the banks currently own that have not been sold yet.</blockquote>


Using Jim the Realtor's figures for San Deigo County, he calculated that the number of people in default but not yet foreclosed is approximately<strong> ten times </strong>the number of REOs not on the market (his exact figures were 11,700 NODs, 8,595 NOTs, and 4,161 REOs, with approximately half of those REOs on the market, so 11,700+8,595=20,295 vs 4,161/2=2,081). He also thought that most of the REOs not on the market were actively being prepped to be put on the market (as opposed to being held off the market on a permanent or semi-permanent basis), and he also said that the number of REO properties was dropping (indicating they were being sold).



So, one of the following has to be true:



1. There is something fundamentally different between San Deigo County and Orange (and now Riverside) Counties. Of course, if this is being done for accounting/mark-to-market/capital ratio reasons, that doesn't make any sense, and it doesn't make much sense otherwise anyways, IMHO.

2. Jim is wrong.

3. graphix is wrong.
 
[quote author="Geotpf" date=1250817924]



1. There is something fundamentally different between San Deigo County and Orange (and now Riverside) Counties. </blockquote>


IMO, this is almost correct.



There are four homes two minutes walk from my house that are foreclosed and unoccupied and not currently for sale. The one home that got the lighting fast turnaround REO is priced $100K too high at $420K and IMO will not move ever at that price.
 
Judge for yourself.

What zip code do you want for the list of REOs. I will email it to you. You can check for yourself. It is not difficult.

Forget about Jim the Realtor being wrong or right. Judge for yourself.

I will send you the list of REOs.

You get the list of for sale properties on Redfin, click on "address" to alphabetize the list, and the check the REOs to see if they are on the Redfin list.

Why are you so intent on being confused or intent on the banks doing something illogical? The banks are doing what they have to do to keep their cap ratios above minimum. It does make sense.

The banks have to take two write downs at foreclosure.

The first write down is at the day of the auction.

The bank had been counting all the unpaid monthly payments as income even though they had not actually been collecting it. Yes, that seems odd, and I think it is immoral and should be illegal, but bank accounting standards are completely different than accounting standards for everyone else, except maybe the government.

When the bank takes the property back, they have to "uncount" the income. That is the first writedown and they postpone it as long as possible by postponing the auction.

The second writedown they take is at the time they sell the REO. After that sale, the actual amount of principal write down becomes evident and the loss goes from being recognized to realized.

Some of us understand that the banks are postponing this write down by postponing the sales and yes, they also have to clear up paper problems and the property to get them ready for sale, and they do not have enough staff to do so.

You can understand this also.

Give me the zip you want the number or list of REOs for. I will post the number of REOs here if that is what you want, or I can email you the list if that is what you want.

You can see for yourself and you will not have to depend on Graphrix or Jim the Realtor to tell you what is fact.

If you want the list emailed to you, pm me your email address.
 
Maybe choice 1 is it then. That is completely possible, I suppose. Seems weird, though-why would ajoining counties in the same state have such a difference in the way REOs are handled? In any case, I give up, you are right, I'm wrong. This will be my last post in this thread.
 
You must log in or register to reply here.
Back
Top