bubbleinfo.com

From HW:

Bank of America Merrill Lynch analysts believe the federal government should begin investing in distressed real estate directly through a second round of the Public-Private Investment Program to reduce the shadow inventory of properties.

The original PPIP was a coordinated effort between the Treasury Department, the Federal Reserve System and the Federal Deposit Insurance Corp. to hold real estate assets off bank balance sheets in order to free up credit lines. Through July, the government has invested in more than $22.4 billion in the PPIP.

But while BofA Merrill Lynch analysts called the program a success for driving up the value of residential and commercial mortgage-backed securities, they said PPIP 2.0 would be critical to reduce homeownership rates, the amount of delinquent and foreclosed homes in the shadow inventory, and increase the value of real property.

Homeownership rates dropped to 66.9% in the second quarter, according to the Census Bureau. BofA Merrill Lynch analysts said the adjustment to a more natural 62% to 64% rate is under way. Converting another 3 to 4 million homeowners to renters would be required to get there.

At $200,000 a property, it would cost between $600 billion and $800 billion to make that reduction.

Initial targets for the program would be the 5.5 million delinquent borrowers.  “Despite all modification efforts directed at this group, we think it is probably only a matter of time before these many homeowners are no longer homeowners,” according to the report.

Read the rest of this entry »

The number of properties making it to the court house steps is on the rise – there has been a 50% increase roughly in SD County trustee-sales since the end of June (from 200 to 300).  It’s still a pittance, however, compared to the 14,493 properties in default in San Diego County:

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The SFR trustee sales in the North SD County Coastal region have been fairly steady however – no big spikes yet. There has been an average of seven SFRs foreclosed per week over the last 12 weeks (avg of 2 of 7 bought by third-parties), even though there are 608 on the NOD/NOT lists. Are servicers trying to squeak out every last loan mod they can find, or deliberately holding back?

North San Diego County Coastal Trustee-Sale Results, SFRs-only:

It appears that the servicers are managing the drip very carefully for the higher-end properties, but if there are any surges, you’ll see them here!

Let’s designate a series of homes to watch so we can identify if there’s a significant leg down in the works, or just a bumpy ride through tract-ville.  Using newer tract homes for markers is the easiest way to gauge the trend, because of their similar nature. 

In the video below, you’ll see that there’s a 4,225sf REO coming to market, and the last two model-match sales were significantly higher than the opening bid – but both had $200,000 in upgrades, according to the MLS remarks.  If the REO is priced way under, will buyers come running?  If they don’t, it’ll look like a leg down just based on price only, but as you’ll see from the exterior, its sale could be hampered by the “features”:

Looking for a desperate seller that you can work over?

They are hard to find – even the short-sale sellers hold out like they have some bargaining power, when really all they are doing is extending their free rent.  Buyers are frustrated enough that many, if not most are paying a premium, just to end the search, and get on with life:

The TV pundits who make general statements about the real estate market (good and bad) aren’t helping those in need of accurate data for their specific area – get it locally. 

But the talking heads have the ability to influence, and in this video they actually have a few good things to say about the real estate market.  If the national stats can wobble along over the next few months, will pundits start talking it up?

Not every short sale in progress is getting the benefit of the doubt – servicers are dropping the hammer here and there.  Will it turn into the trend?

It looks like summer is finally here…for a couple of days anyway.

It’ll mean more people will be out and about, seeing stuff like this around town:

CA renter, a big supporter and blog commenter since the beginning of bubbleinfo.com was nice enough to sit down and talk real estate to celebrate today’s 5th anniversary.  I respect her desire for privacy, so you’re stuck looking at me a lot – sorry. She is a valued contributor because her comments on the blog are based on reality – she is sold at the peak, banked the money, and has been carefully looking to buy a home ever since….and is on the street searching regularly!

Thanks to all participants over the years!  Jim the Realtor

Reader “positive” said that ‘ghostfaceinvestah’, an MBS-trader who comments on Calculated Risk, trusts that LPS accurately reports the mortgage delinquencies and defaults data (I had mentioned my skepticism – Mark E., what do you think about LPS?). 

I did email LPS this morning to inquire about getting delinquency counts by zip code, but no response yet.  I asked others the same question a few months ago, and corelogic wanted $25,000 per month, and Experian never responded.

If LPS is the best resource, let’s examine their latest report, as seen in the REC:

According to Jacksonville-based Lender Processing Services’ (NYSE: LPS) latest First Look Mortgage Report, mortgage performance statistics derived from their database of nearly 40 million mortgage loans showed an acceleration of U.S. home loan delinquencies entering the foreclosure process in August 2010.

“The fact that we’re seeing foreclosure inventories rising is more a factor of process than increasing deterioration,” explains Herb Blecher, Senior Vice President of LPS Applied Analytics, “Loans that have been delinquent for a historically long period of time are just now beginning to move through the pipeline. As of July 2010, the average length of time a loan in foreclosure had been delinquent was nearly 470 days.”

Blecher further commented, “Now, after the intensive efforts of the last year or two, remaining home retention options appear to be exhausted and servicers are beginning to process more of these seriously delinquent loans.”

Orlando Realtor Tonya Giddens commented, “Given this country’s continued high unemployment rates coupled with the growing number of strategic defaults by families in many U.S. cities with negative home equity, these growing foreclosure numbers don’t surprise me anymore.”

LPS Report Highlights:

• Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 9.22%
• Month-over-month change in delinquency rate:  -1.0%
• Year-over-year change in delinquency rate:  -5.1%
• Total U.S foreclosure pre-sale inventory rate:  3.80%
• Month-over-month change in foreclosure presale inventory rate:  1.5%
• Year-over-year change in foreclosure presale inventory rate:  4.9%
• Number of properties that are 30 or more days past due, not in foreclosure: (A) 4,947,000
• Number of properties that are 90 or more days delinquent, not in foreclosure: 2,374,000
• Number of properties in foreclosure pre-sale inventory: (B) 2,038,000
• Number of properties that are 30 or more days delinquent or in foreclosure:  (A+B) 6,985,000
• States with highest percentage of non-current* loans: FL, NV, MS, GA, IL
• States with the lowest percentage of non-current* loans: MT, WY, AK, SD, ND

*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.

Frank asked about the breakdown of REO/SS/regular-sellers:

SD County, August 2010, all property types

North SD County Coastal (La Jolla to Carlsbad)

Note that when a listing is marked contingent, the ‘days on market’ clock keeps ticking. It is only once it is marked pending that it stops – which enables the fraudulent sales to misrepresent the actual time on market. In other words, a listing agent can input a listing and immediately mark it contingent, then change it to pending 3 months later – and the DOM will show 90. Yet above the short-sale average DOM above is much longer than the others – it’s because some agents incorrectly mark their short-sales pending, instead of contingent, which runs up the DOM.