Mr Mortgage – BREAKING APRIL CA FORECLOSURE STATS

Posted on May 13th, 2008 in Mr Mortgage's Personal Opinions/Research

The new April CA foreclosure stats are just out, compliments of Foreclosure Radar. They are now the first company with real foreclosure data on the street each month. In April, Foreclosure records were set across the board in California still confirming, in my opinion, a disaster of epic proportions coming. The data continue to worsen.

Please check-out YouTube video version here! (Be sure to rate it highly if you like it!)

The real data are in stark contrast to the bullish nature of a popular recent Wall St Journal story by Cyril Moulle-Berteaux, managing partner at Traxis Partners in New York, various reports and comments from Trim Tabs beginning about a month ago when the firm’s CEO publicly announced it went long financial stocks, and various other ‘analysts’ trying desperately to call a bottom for the past year, to an even greater degree in the past two months.

First, Notice of Defaults (NOD = pre-foreclosures) were up 2.6% to a record high of 44,100 from 42,700 last month. This is the first step to foreclosure when a borrower is approximately 90-days past due on their mortgage. In about 75% of cases, these are not cured leading to a jump in foreclosure sales and bank owned Real Estate Owned (REO) for months to come. If you combine March and April NOD’s, CA had a whopping 86,800, which should produce almost 65k Foreclosure Notices in the next 2-3 months. That is more than the total monthly sales in CA for many months now. Keep in mind that this is only new foreclosure activity entering the system and not home owner, builder or bank REO inventory, which is where the bulk of the inventory lie.

Second, Notice of Trustee Sales (NTS = Foreclosure Notices) were up 7.8% to a record high of 28,892. These are issued roughly 90-days after the NOD (above) so this figure was mostly from the NOD’s filed in Jan, which totaled approximately 38,500. For next month’s preview of NTS, use the Feb NOD number of 37,400 and multiply by 75%…28,050 if the trend holds. Then, the NTS number begins to balloon due to NOD counts accelerating into 2008. As an example of rate of change, NOD’s for Nov 2007 were 23k, Dec were 33k, Jan 08 were 38,500, Feb were 37,400, Mar were 42,700 and Apr were 44,101. The time from NOD to NTS is roughly 4 to 5 months, so judging from the past four months of NOD’s (162,700) at a 25% cure rate (44,700) we will have approx 122,000 units slamming the CA auctions over the next 4 months. Of those, if the trend continues of 97.5% going back to the bank as REO, the banks will get back 119,000 homes to add to their shadow inventory. Again, this is more than the total monthly home sales over the past four months including home owner, builder and bank-owned REO sales combined.

Third, Foreclosure Sales at Auction jumped 44% for a total of approx $9.5 Billion from $6.87 Billion last month. This DOES NOT mean consumers bought the homes. As a matter of fact, if there are no bidders then the bank who holds the note typically buys the home. So, the total ‘sold at auction’ count increasing is more a function of the total NOD’s increasing 4 to 5 months earlier. What is important to track is how many went back to the bank, which stayed very high at almost 98%. So essentially, Foreclosure Sales at Auction is bad thing because it shows actual foreclosures are increasing and so is bank REO, which is the shadow inventory wildcard.

Fourth, Discounts were at a record pace. 84% were discounted by 25% or more off the original note amount. 47% were discounted by a whopping 30% or more. Keep in mind, this ‘discount’ is from an 80% first mortgage in most cases so many of these could be selling for 50-60% off the prior appraised value.

Fifth, 97.75% of the homes failed to sell at auction so the banks bought the rest back. That percentage was in line with last month. Bank REO is quickly becoming ‘The Real Estate Market’.

Important Notes…

For those of you who live and die by the monthly existing and new home sales report, remember, that bank REO sales are counted in the existing sales number and is very quickly becoming ‘the real estate market’. As a matter of fact, Data Quick reported that 38.4% of last month’s total CA Existing Home Sales had foreclosure action within the past 12 months, meaning much was bank REO shadow inventory. With so much new foreclosure inventory entering the system and discounts getting deeper each month, there should continue to be more bank REO sales of existing homes in the future, perhaps making it seem as the housing crisis is ending.

This is the primary problem with so many ‘analysts’ positive housing predictions. How can you truly judge inventory vs. sales numbers when the banks are taking back more homes at auction and adding to their shadow inventory than sell each month? Remember, the NAR only reports homes listed with a real estate broker as ‘inventory’ and a very small percentage of bank REO inventory is listed. The amount of ‘non-listed’ bank REO inventory is staggering.

What is most frightening is how quickly values are dropping as a result of this. With as much bank REO inventory selling for as deep of discounts as we are seeing, it is forcing an immediate and swift mark-to-market change in values of entire neighborhoods all over the state. If a few of these homes sell at a 30% discount within a mile radius of your home and they are similar properties, your home value will be negatively impacted. Very quickly, America’s real estate is being marked-to-market by the bank’s shadow inventory, accelerating a natural process that should take years. This causes even greater numbers of home owners to go into a negative equity position causing even more loan defaults. It is a vicious cycle that has never been seen before.

For those financial institutions looking for more detailed foreclosure and REO information by bank, please email me at mrmortgagetruth@gmail.com

Home owners/buyers and Realtors stay tuned! In the next month a new service will be launched, which will enable you to see the real foreclosure risks surrounding a particular subject property, perhaps your home. It is now apparent that the foreclosure market is quickly becoming ‘the real estate market’. With foreclosure inventory carrying such deep discounts, heavy foreclosure or bank REO inventory in your neighborhood presents a threat to your home’s value. Finally, you will be able to easily identify those threats and act according.

Before you go, please be sure to subscribe my blog email or RSS feed on the home page. Then, you will be updated quickly and I promise you that I will continue to have data nobody else does. Make sure you go to Foreclosure Radar for your FREE CA monthly foreclosure report.

Have a great day and by all means, Don’t Believe the Hype! -Best, Mr Mortgage

Please check-out YouTube video version here! (Be sure to rate it highly if you like it!)

Below are some other Mr Mortgage Stories on this unfolding crisis.

The End Of The Housing Crisis??? Huh???

Is Now the Right Time to Buy a Home?

How Much Home Can You Afford? Are You Sure!?

ALT-A Disaster Looming – Know the Facts!

41 Responses to “Mr Mortgage – BREAKING APRIL CA FORECLOSURE STATS”

  1. […] unknown wrote an interesting post today onHere’s a quick excerptThe new April CA foreclosure stats are just out, compliments of Foreclosure Radar. They are now the first company with real foreclosure data on the street each month. In April, Foreclosure records were set across the board in California … […]

  2. […] Read the rest of this great post here […]

  3. Mr. M,

    My landlord owes $1.2 million on the house I rent from him. Its market value is around 600k. I am fully expecting to get booted out in the foreseeable future due to foreclosure but am wondering if I can somehow find out if he is already in default or not (short of opening his mail – which I am very tempted to do). I am just trying to pin down my departure date.

  4. what state

  5. […] Journal – bubbleinfo.com wrote an interesting post today on Mr Mortgage – BREAKING APRIL CA FORECLOSURE STATSHere’s a quick excerptThe new April CA foreclosure stats are just out, compliments of Foreclosure Radar. They are now the first company with real foreclosure data on… […]

  6. Massachusetts

  7. http://www.foreclosuremass.com and its free!

  8. […] http://mrmortgage.ml-implode.com/2008/05/13/84/ […]

  9. C-Nut, why is his mail coming to your address? He may have engaged in fraud, stating he is the owner occupant of the home. You shouldn’t be helping him.

    And here’s something else I heard but don’t know much about. Someone told me if the bank knows the house is a rental and maybe the lender assigns the rents to themselves, the lease is not automatically going to be voided in a foreclosure. IOW if the bank is already your LL, they can’t toss you out as easily. That can’t happen if they don’t know it’s a rental! But of course you should check your state laws.

  10. Would it be possible to go into more detail on this shadow inventory mentioned?

    I know there is a ton of bank owned stuff on the local MLS systems but where is all the shadow inventory and how is it effecting the comps if the sales are not through the MLS and realtors?

    Much Thanks,

  11. If it is in foreclosure the bank will be happy with someone paying rent.

    MM good stuff as always.

    I think CA properties need to go to 30% of peak value.

    Does anyone have a count or estimate on how many houses were just flipped over the years but not lived in; because all these houses aren’t actually needed.

  12. I counted over 40 “trustee sale” notices and about a quarter of a page of help wanted ads in the Idaho Statesman yesterday. this has been gaining (A LOT!!) monthly over the last year or so. 4 years ago, there were 4 or more pages of help wanted ads and less than a page of forclosures, they seem to have “switched sides” so to speak. frightening things to notice, even more so because almost no one seems to be aware of it!!!!!!

    Thanks for further awareness lessons Mr. Mortgage.

    Laurie

  13. In the “IE” at least, values are already off by 30% plus in most areas. I won’t be surprised to see many areas in CA drop by 50% or more before this thing bottoms out.

  14. me neither

  15. C-Nut, don’t open your landlord’s mail or you will have US Postal Inspector visiting you, courtesy of your landlord. I agree with above post; sounds like your landlord executed a fraudulent loan application.

    Try admin suggestion using that link; but, if that fails, do this –

    To find out difinitively if NOD is is recorded, have your attorney (I assume your have one given the income level to pay rent/lease for such a property) perform a title search at the County Auditor/Clerk/Recorder. That way you can discuss any other concerns you may have being a tenant in such a situation. You could do the search yourself but its a bit complicated & rather time consuming; the office will not do it for you. Don’t bother with a title company due to privacy regs per recent Sarbanes-Oxley legislation.

    Otherwise, try an on-line search in your local newspaper as all NOD & NLT are required by law to be “publicly” notified, just like divorces/marriages/births/deaths. Use landlords’ last name or use address in full, etc.

    Either way, your best bet is your attorney given YOUR situation.

    Good luck!

  16. […] California Foreclosure stats from Foreclosure Radar 2 days early. You can alternatively read it here if you cannot access youtube. (at work, […]

  17. And how many people will stay in their homes, shelling out the monthly mortgage payment on a property that is now clearly underwater, when they realize they could rent the same place for a LOT less?

    These banks are cutting their own throats with the big REO discounts, which will only stimulate more walkaways/future foreclosures, but what choice do they have?

    Doomsville.

  18. Yeah my landlord is not committing fraud – in this regard at least. He still runs his business out of a detached office on the property; we share a mailbox. Thanks everyone for the advice.

    This guy has taken $4 million out in MEW (on four properties) over the past few years and essentially lived on it. He’s got 250k left and his bills are 25k-30k per month. Personally, I think he is stupid to keep paying the mortgages and have told him as much. I told him keep/hide the cash and live bill-free until they boot you out. Well, people who get into such binds aren’t exactly overburdened with brains. Imagine if he took that $4 million and did something smart with it like buy commodities.

  19. Great website! Great information. In my area of Central California. All we see is lies lies and lies, by the local city councilmen (all Realtors), local newspaper (most of its profits are from Real estate advertisements) and the local Realty board. The problems is pernicious and may cause the SECOND Great DEPRESSION in the USA. Go To http://www.RunOnTheBank.Org to see the lastest news and information on how to prepare YOUR SELF for the economic and social crisis ahead of us.

    Locally, many Realtors HIDE the REO’s they get from the banks into less desireable zip codes outside of commuting distance. WHY? #1) Because the “local” Realtors—remember all Real estate is “local” LOL, are trying to make inventory look lower than it is in “prime” areas to keep prices high. Also if the bank owner can’t sell the house, they will eventually lower the price so the Realtor can buy it. This “pocket” listing game was tried on me two months ago. I am a renter and was carefully looking at the REO’s for sale in my area. NOTHING BUT JUNK. This junk was overpriced by 50% and was still 1/2 the price if two years ago. One morning I was browsing the poublic MLS (I check it twice per day) and I found a great looking deal. The only problem it was supposed to be in a remote location 60 miles from nowhere. The price looked good so I ran it through mapquest and other internet maps to see exactly where it was. BANG! IT WAS ONLY TWO MILES AWAY. Apparently the listing agent “accidentally” listed it in the WRONG ZIP CODE. This looks like it was on purpose and I will tell you why later in this comment. I IMMEDIATELY called the listing agent to see if I could do a walk through. BTW I have been renting since the bubble started and I have saved my “mortgage money” for a down payment. Well well, I can now PAY CASH FOR THE HOUSE I WANT! Do you think Realtors care? NO! They want the best deals—ALWAYS—for themselves–its called GREED! The listing agent answered the telephone and told me that she WOULD NOT SHOW ME THE PROPERTY ( I AM A CASH BUYER–whats the problem). She said it had a “pending sale” and I asked if I could look at it any way, I might make a higher offer than the listed asking price—this is NEVER done in this market. Realtor/investors try to squeeze every dime out of the price that they pay in this market–and they know all the dirty little tricks. I asked her who owned the house and she told me–WELLS FARGO. SHE WAS ADAMANT NO MORE OFFERS! SHE WAS SCARED because she knows I caught her hiding this “gem of a house” in crapola miles AWAY. The house was almost new, single story, had all the amenities and was sitting on 2/5 acres of professionally landscaped grounds. Shje kep telling me—NO ONE WILL SHOW YOU THE HOUSE! I said—why is it “on the market–mls) and also hiding in the WRONG zip code—she hung up the telephone. I did research through other Realtors (big mistake) and was not able to find the real owner. Later I found that INDYMAC owned the property and that it sold for asking. GUESS WHAT ? NO SURPRISE who bought it. A REALTOR FROM HER OFFICE! Okay its perfectly legal —but the house had been listed for months at different INCORRECT zip codes (terrible areas–spotty). I contacted Indymac and told them I wanted to pay above asking to the LISING AGENT. I also told them she had been hiding their property to keep buyers AWAY–not sell it, and she also wanted to get them to lower the price down to lack of activity–they did. SOUNDS LIKE FRAUD TO ME. But complaints to the local REALTOR boards—went like this. “She wouldnt do that she is nice. Well she may be “nice” but she refused to take a CASH OFFER ABOVE ASKING price, LIED about the REAL OWNER (bank) to keep me, as a buyer, away from the house.

    I called up the MLS service and they told me that this happens all the time and it was “difficult to prove”. I told them what is so difficult about forcing a correct zip code on a CORRECT address? They didn’t know—buit they did remind me that the MLS was DESIGNED ONLY AS A SERVICE for REALTORS NOT THE PUBLIC—the MLS admonished me– “This is NOT a public service”, its a service for member Realtors only. Well they went on to advise me that if they could prove the reason for the “mistake” the listing agent could be fined $500 by the MLS but it was not likely. They continued to “brag” about all the little sneaky ways that are usaed by local Realtors to hide “listed” properties. One of the tricks—is that the TOTAL number of houses for sale using any number of filters (age, square footage, price, location) was a constant. What? They said the “software program” would not let them, show how many listings there really were. For example–in one small geographic area— there are ten new listings per day, yet only an average of 25 houses are “sold” –closed per months (includes some mortgage company takebacks) but the total number of listings NEVER INCREASES. This is because, they want to keep the INVENTORY LOW even though it is in reality high—its called LYING! The MLS technician told me that there were “thousands” of listing in this small area, yet the maximum number shown would be only “640”. It said it shouldn’t matter how many total houses were listed—and I told him if “it didn’t matter” why not tell the truth with accurate figures. He blamed that on the programmers.

  20. I really enjoyed seeing that historical data. I also read on http://www.dqnews.com that the number of homes sold this march was 24,565. Based on your 75% NOD -> Foreclosure conversion rates, there will be more new homes going into Trustee Sales each month than are being sold statewide – and this will happen for the NEXT FIVE MONTHS! (

    Based on these basic numbers, it seems like normal people will basically be unable to sell their homes, because of the upcoming avalanche of foreclosures. Normal sales will fade away to nothing. Pretty soon foreclosures will BE the market. That should cause a rapid move in housing prices, which will shake any people out who don’t really, really want to be living where they’re at right now.

  21. Very enlighten indeed ! However, I’ve heard than banks are still holding off their inventory and skeptical to sell at big discount, and liquidity has been boosted with the FED’s help, so do you think they will hold it long enough for the new bargain seekers to enter the housing market ? Especially once we see some gained strength of the economy.

  22. Can you tell me a good place where I can find out about foreclosures in northern California (South/East Bay area)? Are any of these free and have foreclosure auction information?
    BTW, great site.
    Thank you.

  23. foreclosure radar gives a 3-day free trial but also realty trac gives some stuff. I just dont trust their data totally. It will probably be fine for some searches if you were not planning on using it to purchase.

  24. Here’s my question: As a normal, not behind in payments homeowner who needs to sell by the end of 2010, am I better off selling for a big discount now and making a small amount of profit or hanging on for 12-18 months when who knows what the market will be like?

  25. where is Mr Mortgage?

  26. yoyo Feng!

    Nervous – chances are your home will be worse the same or less but at that point there is a good chance everyone in the nation will qualify for a massive negative equity bailout. I would say at this point if you are already toast, you may want to stick it out. If you had to leave in 6 months, then taht is a dif story.

  27. 555, Mr. Mortgage, I got my ass kicked by shorting home builders… 555… And Gold still under water…

    When will the so called “massive ARM reset 2008” come true? I noticed that on Foreclosure.com, the total number of foreclosures does increase pretty fast, but not exactly MASSIVE RESET…

    I wonder if I have done a wrong thing to short home builders. If so, I have to persuade myself to have a better attitude regaring contributing my hard earn dollars to US society…

  28. Hey, u see the housing start? Massive condo building, and the Midwest is where the activities increases. Are people gonna move to Michigan finally and enjoy the low priced multifamily dwellings?

  29. feng,
    Patience. There’s a huge short interest rise in a ton of close-end high yield/muni bond funds. (15 day increase of 700% or more.)

    Someone knows something.

  30. […] JAY PARMAR wrote an interesting post today onHere’s a quick excerptThe new April CA foreclosure stats are just out, compliments of Foreclosure Radar. They are now the first company with real foreclosure data on the street each month. In April, Foreclosure records were set across the board in California … […]

  31. To Travis:

    If what you say is true, then Real Estate Commissioner for State Of CA should be contacted. Whether you have legal standing to file a complaint, I’m not sure.

    There’s more to it than the MLS levying a fine. MLS is private, not public, and made up of Realtors; one must join the local Board of Realtors (again private, not public) before one can join the MLS.

    Anyway, good that you let IndyMac know because they have a legitimate legal complaint against their listing agent and that MLS. CA RE Commissioner can lay a really big whammy on these people if there is provable self-dealing, which quite frankly, would not surprise me in the least. I’m certain there is plenty of this going on across the country, and it’s unlawful.

  32. […] Mr Mortgage, May 13, […]

  33. […] Mr Mortgage – BREAKING APRIL CA FORECLOSURE STATS […]

  34. […] Breaking CA Foreclosure Stats […]

  35. […] DataQuick reported that a total of 31,150 new and resale houses and condos were sold statewide last month, up 26.8 percent from March and down 10.9% from April last year. Last month’s total made for the slowest April since 1995. The question here is, ‘are we chewing through inventory’ and the answer is, NO. Of the sales, 37.7% (11,750) were foreclosure resale’s. Most of this 11,750 is from the bank REO stock, which is the ’shadow inventory’ I always talk about. These homes are typically sold through real estate agents or large auction aggregators such as the Real Estate Disposition Corp (REDC) . Bank REO sales are counted in the existing home sales figures released each month that gets the stock market so hot and bothered. Only a very small percentage of bank REO has been sold each month until very recently when the numbers increased dramatically. These homes are being sold at massive discounts to the note amount and pose the real threat to home prices across the nation. At 37.7% of all sales, this inventory is quickly becoming ‘the market’ and is rarely accounted for in the ‘month’s supply’ numbers released each month by the NRA because it is not listed in the MLS in most cases. I talk about it in my April Foreclosure Report released last week.  http://mrmortgage.ml-implode.com/2008/05/13/84/ […]

  36. […] Guide to the TRUTH! » MR MORTGAGE – April CA Home Sales Rise…So Do Inventories! on Mr Mortgage – BREAKING APRIL CA FORECLOSURE STATSadmin on Mr Mortgage – ‘Short-Refinances’ Gaining Popularity..linda on Mr Mortgage – […]

  37. […] Mr Mortgage – Breaking April CA Foreclosure Stats […]

  38. […] April CA Foreclosure Stats – Getting Worse Quickly […]

  39. […] see Breaking CA April Foreclosure Stats – […]

  40. […] estate is being marked to market overnight by lenders dumping homes at massive discounts. See my April Foreclosure Report for more on this […]

  41. […] This was a near 9% increase month-over-month. Last month $9.237 Billion went back to the bank. See my April CA Foreclosure Report.  It is obvious that the foreclosure crisis is continuing to worsen. If the banks are lucky and sell […]

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