Foreclosure activity slipped 3 percent in November when compared to the previous month, but filings at various stages of the process showed starkly different movements, according to RealtyTrac’s latest market report.
Scheduled auctions hit a nine-month high following the default surge that began in August. At the same time, RealtyTrac says REO activity is at a 44-month low.
Total foreclosure filings – reported on 224,394 U.S. properties in November – are down by double-digits from a year ago, but RealtyTrac doesn’t view the numbers as the making of a trend.
James Saccacio, co-founder of RealtyTrac, says the 14 percent year-over-year decline in filings last month is the smallest annual decrease recorded over the past year, and he points out that some bellwether states such as California, Arizona, and Massachusetts actually posted increases in foreclosure activity from November 2010.
“Despite a seasonal slowdown similar to what we’ve seen in each of the past four years, November’s numbers suggest a new set of incoming foreclosure waves, many of which may roll into the market as REOs or short sales sometime early next year,” Saccacio said.
Default notices (NOD, LIS) were filed for the first time on a total of 71,730 U.S. properties in November. Foreclosure auctions (NTS, NFS) were scheduled on 96,540 properties during the month, and lenders repossessed (REO) a total of 56,124 homes. Nevada posted the nation’s highest foreclosure rate for the 59th straight month. Filings rebounded 3 percent in November from a 45-month low in October, when a new law was passed altering the foreclosure process in the state.
One in every 175 Nevada housing units had a foreclosure filing last month, more than three times the national average.
Scheduled trustee’s sales in California hit a 10-month high in November, helping the state maintain the nation’s second highest foreclosure rate. A total of 26,509 trustee’s sales were scheduled in California last month, up 14 percent from November 2010 – the first year-over-year increase in scheduled foreclosure auctions in the Golden State since March 2010.
Arizona foreclosure activity increased on a year-over-year basis in November for the first time since October 2010. With filings up 4 percent from a year earlier, Arizona posted the nation’s third highest foreclosure rate for the fifth month in a row.
Substantial monthly increases in foreclosure activity in Utah and Georgia lifted those states’ foreclosure rates into the nation’s top five in November. Utah’s foreclosure rate ranked No. 4 thanks to a 74 percent monthly increase in foreclosure activity. Georgia saw a 23 percent increase in filings, giving it the No. 5 spot. Other states with foreclosure rates ranking among the top 10 were Michigan, Florida, Illinois, Ohio, and South Carolina. South Carolina cracked the top 10 for the first time since RealtyTrac began issuing its report in 2005.
After 3-Year Low, California Foreclosure Filings Rise Again
Having fallen to its lowest level in three years, California’s rate of foreclosure filings rose up to come back in line with recent rates, according to the latest information from DataQuick.
At the same time, the share of properties at foreclosure auctions purchased by investors or other non-lender, non-government entities is growing. The rate was 29.7 percent for the third quarter, up from 28.3 percent last quarter and 22.7 percent one year ago.
Foreclosure filings in the state rose 25.9 percent in the third quarter, while posting an annual decline of 14.4 percent.
In total 71,275 foreclosure filings were filed on 70,554 homes in California in the third quarter. Most foreclosures involve loans originated between 2005 and 2007, according to DataQuick.
The highest concentration of default notices took place in lower-cost neighborhoods.
ZIP codes with a median sales price of $800,000 posted a 12.1 percent rise in notices of default filings as opposed to the statewide increase of 25.9 percent.
In these ZIP codes, there were 2.8 foreclosure filings per 1,000 homes, while in ZIP codes where median sales price stands at $200,000, there were 11 foreclosure filings per 1,000 homes.
The average homeowner who received a notice of default filing during the third quarter was eight months delinquent.
DataQuick measured the median amount a homeowner facing foreclosure owed on a median mortgage to be $19,198 on a $331,333 loan. This is a 17 percent increase from the previous quarter and a 27 percent increase from the third quarter of last year.
The counties that experienced the least amount of foreclosure filings were Marin, San Francisco, and San Mateo counties, while the counties experiencing the highest incidence of foreclosure filings were Sacramento, Madera, and Stanislaus counties.
While foreclosure filings rose for the quarter, the rate of homes lost to foreclosure during the quarter declined by 8.4 percent. The total number of homes lost to foreclosure was 38,895. The is down 14.3 percent from last year.
Homes that did foreclose in the third quarter took about 9.9 months from the notice of default to the final foreclosure. This rate is almost identical to the previous quarter’s timeline of 10 months but up from last year’s 8.7 months.
Sales of foreclosed homes made up 34.2 percent of all home resales in California. This is down from 35.6 percent last quarter and 35.5 percent last year.
Short sales, on the other hand, increased from last quarter, up from 17.4 percent to 17.8 percent. The third-quarter rate is also higher than the rate recorded in the third quarter of 2010 – 17.3 percent.
“The way it looks right now, it’s reasonable to expect default filings to run at a somewhat higher level than we saw earlier this year,” said John Walsh, president of DataQuick. “Obviously, some lenders and loan servicers have begun to plow through their backlogs of delinquent loans more aggressively.”
Surge In Defaults Breaks Six-Month Run Of Declining Foreclosure Stats
The lingering effects of the foreclosure moratoriums enacted after evidence of improper foreclosure processing came to light appear to be fading. Data released by RealtyTrac Thursday shows the first rise in foreclosure filings since January, with all of the increase coming from new default notices. The tracking company says overall filings jumped 7 percent between July and August. Default notices posted their biggest month-to-month increase since August of 2007, up 33 percent.
"Bank of America and Fidelity National Financial have reached an agreement confirming that Fidelity will provide title insurance on the sale of foreclosed properties," said B of A spokesman Dan Frahm.
Under the agreement, Fidelity will defend the new homeowner in court if a foreclosed owner challenges the title. B of A will cover the costs and, if necessary, any damages awarded to the previous owner.
"Bank of America and Fidelity National are taking this step to facilitate the continued availability of title insurance that is vital to the marketability of foreclosed properties," Frahm said.
The giant bank is seeking similar agreements with other title insurers.
American Land Title Association chief executive Kurt Pfotenhauer welcomed the B of A/Fidelity agreement.
“Title insurers are looking to lenders to provide appropriate indemnities," he said. ALTA also has approached the GSE regulator about title indemnifications.
"We will continue to work with federal and state regulators, Fannie Mae, Freddie Mac and lenders to bring certainty to the marketplace," Pfotenhauer said.
One in every 29 Nevada homes received a foreclosure filing during the third quarter. Looking at total numbers of foreclosures, neighboring California was worst, with 191,016, followed by Florida, Arizona, Illinois and Michigan. Combined, the five states accounted for half of all foreclosures last quarter. Of course, once the moratorium ends, we can expect a new tidal wave of foreclosures. John McGeough, a broker, said that the current foreclosure freeze may give distressed homeowners extra time to do a short sale and avoid having their homes repossessed by the banks. "Foreclosure should be the last resort."
Copyright Loss Mitigation Institute LLC 2010.
All Rights Reserved.
The 30-year, fixed-rate mortgage hit its lowest point in more than 50 years. The Freddie Mac Primary Mortgage Market Survey reported the average rate for a 30-year, fixed-rate mortgage at 4.19% with an average 0.8 origination point for the week ending Oct. 14, down from last week's average of 4.27%. A year ago the average was 4.92%. This is the lowest rate the survey has recorded since its inception in 1971. Mortgage rates were last at this level in April 1951, according to Freddie Mac. The Bankrate survey of large banks and thrifts reported the average rate for a 30-year, fixed mortgage is 4.47% with a 0.32 origination point, slightly above the 25-year-old survey's record low of 4.45% posted last month. Rates for 15-year FRMs are falling steeply, setting a new low for Freddie Mac.
The GSE said the rate was down to 3.62% with an average origination point of 0.8. The rate for a 15-year FRM was 4.37% a year earlier. Bankrate said the average rate for 15-year, FRMs of 3.85% is a new record low and down from 3.87% a week earlier. Frank Nothaft, vice president and chief economist at Freddie Mac, attributed the declining rates to the loss of 95,000 nonfarm payroll jobs in September. The GSE said the average for a 5-year, adjustable-rate mortgage is 3.47% with an average 0.6 origination point, down from 4.38% a year ago. The average remained flat with last week. Bankrate reported the average rate for a 5-year, ARM fell last week to 3.62% from 3.64% previously. The one-year Treasury-indexed ARM averaged 3.43% with an average 0.7 point up slightly from 3.4%. At this time last year, the one-year ARM averaged 4.6%.
Copyright Loss Mitigation Institute LLC 2010.
All Rights Reserved.
The mortgage-foreclosure crisis spilled into the financial markets on Thursday, driving down bank stocks and weighing on mortgage bonds as investors took a grim view of the potential costs. Shares of U.S. banks fell, while the broader stock market was essentially flat. Bank of America Corp., potentially among the most affected, dropped more than 5%. Bank bonds also fell, and the cost of buying protection against a possible debt default by banks climbed. "The level of uncertainty in the economy is at extraordinarily high levels to begin with," said Jack Scott, chief investment officer at BlackHawk Capital Management, a Charlotte, N.C., money manager that owns mortgage securities. "The foreclosure problem adds another layer of acute uncertainty."
So far, the foreclosure crisis hasn't affected consumer mortgage rates, which remain near record lows. They are closely linked to rates on U.S. Treasurys, which have tumbled in recent months. Until recently, investors hadn't fled financial stocks. If the issues raised about foreclosure practices in recent days are easily resolved technical glitches, with most foreclosures resuming after brief delays, then the impact on most investors would be small. "The [mortgage] market seems to be functioning relatively well, but that could change depending on how we see this play out," said BlackRock Inc. portfolio manager John Vibert. But some fear that it may be difficult to do any foreclosures for a while.
The risk is that foreclosure flaws are so widespread, or the political furor so heated, that the entire process grinds to a halt, as Citigroup analyst Joshua Levin said in a conference call this week. In some cases, that would choke off much of the cash flow used to pay mortgage bondholders. Another concern is that banks could be forced to modify billions of dollars in loans, including reducing principal, which could leave bondholders as big losers. Banks, meanwhile, could be hit with investor lawsuits, and foreclosure delays could bring short-term losses. Some investors are pushing for banks to take back nonperforming mortgages in cases of faulty documentation.
Harry Smith spoke with economics correspondent Rebecca Jarvis about the government program designed to help struggling homeowners.
BofA serviced $2.1 trillion in mortgages in 2009 overall, a 5% increase from the year before. Of the other "big-four" lenders, only Wells had a yearly increase at 0.9%. Both Chase and Citi saw decreases. Simon said Bank of America is working through the backlog of its HAMP trials that are still awaiting action. "Progress has been made by Bank of America as we have focused on getting through the backlog of aged trial modifications over the past three months and completing actions on the ineligible mortgages will begin to show up in coming reports," Richard Simon, a spokesman for BoA said. "Until then, any conclusions seem premature." But HAMP may only be a microcosm of the issues in loss mitigation. Lender Processing Services’ Applied Analytics division reported in August that more than 2.6 million mortgage loans are 90+ days delinquent and not yet in foreclosure, the heart of the shadow inventory of homes waiting to hit a troubled market.