Record Foreclosures Sweep CA in July – Breaking News

Posted on August 7th, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

This should be the first you hear of July foreclosure data from any source.

Each month I do a foreclosure report for the state of CA.  CA makes up roughly 35% of the total unit count and 40-45% of the total dollar volume of all foreclosures in the nation.  ForeclosureRadar supplies the best data available and I add in my mojo each month. Below are the previous two months reports.

Sean O’toole, CEO of Foreclosure Radar, was interviewed for a CNN Money story released today and spilled the beans early.  Since its now in the public domain I can let out the headline foreclosure data early.  Make sure to click that link and read the story.  It pertains to the new FHA bailout law and the $4 billion waste of money for states to rehab foreclosed houses.

July was another record month for foreclosures in the state of CA with all hell breaking lose and banks taking back roughly 26,500 homes for $12.5 billion.  ‘Record-breaking’ is not a good thing in the foreclosure universe.  This 25% increase breaks all records ever posted and all foreclosure estimates. 

If past percentages hold true, next week when the national numbers are released by other data sources, the numbers should also show a similar increase.  However, not everyone gathers data the same way so I can’t guaranty what others will report.  If their data do mirror this report, I do not know how the markets will react to this but many times in the past, they have not responded very well to ‘surging foreclosure rates’.

In May we passed $10 billion for the first time with $10.4 billion in loans, or roughly 24k homes, going back to the banks. In June, there were $10.2 billion in loans taken back by the banks, a slight drop.  This was an encouraging sign until July’s figures were tallied.

To clarify, when I say ‘loans taken back by banks’, these are actual foreclosures. When a home goes to the auction block the bank puts up the opening bid. If no 3rd party bidder comes in, the bank buys it back.  All year long in CA at least, banks have been buying back roughly 97-98% of all homes that go on the auction block.  That is an astounding figure in and of itself!

This $12.5 billion in foreclosures were from Notice-of-Defaults (NOD) from the February time frame.  It takes roughly 140 days in CA to go from NOD to foreclosure auction currently due to the back log. In Feb we had a drop in NOD’s to about 37k due to Feb being a short month.  But from March though June we saw NOD’s shoot back up to record levels of about 43k per month (see chart below). This means that the number and dollar amount of foreclosures from Sept through Oct at least should be even greater than July by 10-20% depending on fluctuating cure rates.

My official report will be out in a few days when I will have the final Notice-of-Default, Notice-of-Trustee sale and foreclosure sale figures.  I will also release my monthly YouTube video and forward analysis at that time. Until then. Best, Mr Mortgage

CA Housing Market Chart through June 2008. Please note this chart does NOT have July data, as it is not all available as of yet.

 

Other Related Mr Mortgage Stories

84 Responses to “Record Foreclosures Sweep CA in July – Breaking News”

  1. Most important quote from that article: “With this intervention, central banks have bought some time. But alas, they have not fixed the problem.”

    Clear!! …beep…beep…beep.
    whew!

  2. Kis, there are a few things going on in desirable areas and places of wealth (i.e. SF and Bos for example). These areas and the people that reside in them often have a much higher fico score and thus obtain much better rates and terms. It is these very areas and the people that live in them that have the majority of 5/25 type loans coming due for resets over the next few years. They make money, but spend it equally as fast and rely on credit for the most part like everyone else does. Their credit does not get shut off as fast either, so it has still been there for them if they have needed it to keep the shell game alive. They are hoping this thing corrects before they get exposed. Well it is not going to and these areas and many of the people that reside in them are going to be exposed and soon. That is the 3’rd & 4’th inning at play…

    We could and should be looking at 3 million foreclosures in 2008 in my opinion. Many of these reset schedules are also being blown up and reseting much earlier due to the way the terms are written. We will have a massive wave of resets for the rest of this year. We still have 2 quarters to go and they are not only typically the worst for housing sales, but coming on the heels of major job losses to this very group of white collar workers and rising interest rates that will basically take any chance of recovery out of the mix in what they will end up doing. In other words… with each passing days their options become more and more limited until eventually they will run out!

    All of this on top of credit tightening beyond belief now and specifically at the jumbo level of loans. Again this very same group will be affected the most from this. Subprime is no longer even a big deal as they have pretty much ended their run of defaults in terms of record numbers. Plus they are much smaller in size and scope than what we are about to witness. In other words irrelevent at this point in not only our recovery, but our ability to move forward as a country past this. Heck, it was obvious to me from the start that the concern in Washington was very little up until Fannie and Freddie were exposed. They stood by and watched roughly 1.5 million people lose their homes before they even started to truly react. When they finally did it was to bail out the GSEs and up the conforming loan limits. Kind of makes you wonder what their true motive was doesn’t it.

    In their lack of reaction however and their willingness to allow the failures at the low income (I mean subprime) areas they underestimated the lenders ability to handle it. They then had to open up the discount windows and eventually had to open them up to almost anyone that needed a capital infusion to stay a float. The leveredge these lenders were dealing with did not allow for even the subprime implosion to take place and they were ill equipped to handle it. Now on top of that they have had to extend the discount window through the balance of the year. They are doing what these very same prime and alt-a borrowers are doing and that is trying with every possible idea to stave off the inevitable. It simply will not and has never worked. YOu must eventually pay for the errors in your ways and the bill is coming due, and it is going to be mammoth!

    All this intereference by the Fed and the Governemnt is doing is extending the day of reckoning and the price tag to our childrens, childrens, children. They will be the true sufferers of all of these reckless policies in the end. We won’t fail as a country, but will set ourselves back 50 years after all of this is said and done, and all on the backs of our countries future. Shame on us as a country for doing so if you don’t mind me saying so…

  3. I am watching Nadar/Gonzales on C-Span and all I can say is WOW!!!

  4. do we see any good news from all this ? I always hear- people should dump their homes and rent- the ones who can pay are screwed because, those that can’t, dumped and now our houses are worth less. You can’t re-fi. If you can pay- you can’t modify. what the heck? this is soooo crazy- I can blame, but that doesn’t change anything. The one in Laguna is right they probably held value but not for long- if they don’t rent them they’ll forclose. There are other areas that held value in Cali but, I am sure not for long. So- anything good coming or just doom and gloom?

  5. i’m looking to buy, today I will be looking at some homes. Should i just wait a couple months for the price to drop further or should i make an offer at lets say 10% less than than current market value?

  6. bought at the wrong time:
    It depends on what your idea of good is, hehe. It’s all about perspectives. Believe it or not there are states that have homes holding on the value with moderate to good demand.

    The big bad bailout plan is going to help some people, but even they will have to convince lenders to work with 90% of current value. How many of them do you think will jump at that chance?

    I think the sooner prices start to normalize (pre-2002-03 levels) the sooner we can see the extent of how bad it is, and in relation, see just how badly underwater we are. Gov’t is doing all they can to look good for the elections and that’s keeping a pretty thick paper bag over all our heads.

    As for me, I do see some people getting creative in this market, and I guess I’ll trust that same capitalist free market that got us into this mess will figure some way to turn poo into gold.

  7. This is interesting tho:

    http://tinyurl.com/5ewpvr

    A condo developer in long beach is jumping the gun and auctioning units at roughly half their previous listing price. I’m curious to see how it will do. It’s pro-active tho, and its either they got the reality chills early or just decided to sacrifice a few units for the publicity.

  8. YES!

    As I said, the people who can see any positive in all of this are the ones who stayed financially conservative. They believe in only buying what you can afford.
    When prices dump, these people will come in and start buying again. Sure most of them can afford to buy now, but when you are smart, you buy at the absolute bottom.

    Most of these real estate investors also don’t bank on the perceived equity in their property. They are not flippers. They invest in the long run. They create a CASH FLOW. It’s a lot like the game Monopoly.

    You don’t own shit, until you own it outright. This may be hard fact for people to swallow, but it’s the truth.

    Most people took the blue pill and ignorantly believed their wealth was measured on how much equity one had.

    The question is, do you want he blue pill or the Red? (Matrix for all you you missed the analogy)

  9. This will go on for another 2-3 years. Looking at the charts I feel sorry for the fools (is there any doubt they are anything else?) who purchased late in the cycle. They have had the privilege to be home “owners” for a good 6 months and have found the return on their “investment” is -20% (or ~100K for the 480K median price)

    Anyone willing to guess as to how many families (let alone investors) can take a 100K financial hit and survive unscathed?

  10. Even if you are prime and make more than enough to pay for your home, what incentive do you have to continue paying off your 800K loan (with interest) when the asset value has fallen by over 50% due to market dynamics or worse, neighbourhood foreclosures.

    Even the educated scientists and google geeks will start to question their sanity as they watch their once “elite” neighbourhoods of million dollar tract homes or even million dollar townhomes in some sillycon valley locations start rotting away due to foreclosures or getting rented out to middle/low income families after some savvy investors start buying up these properties and putting them on the rental block.

  11. Chas. Hugh Smith is right – RE will be a Capital Trap for the foreseeable future. It doesn’t matter whether your equity is -50% or +150%. The Cash Flow generated from (Commercial) RE will turn negative once vacancy rates rise. The result will be empty office space – very similar to empty (foreclosed) houses! – and investors holding an empty bag until they go ‘belly-up’. Have a look around at all the Commercial RE for lease or sale. With business bankruptcies steadily climbing (along with unemployment), RE only has one place to go – into the sewer!

  12. PS Remember the first 3 principles of RE investing: Location, Location and Location. The sewer is a Location. Try not to invest there. 😉

    Caveat Investor! Ooops – too late!

  13. is anyone else following the russian georgian conflict? this link is actually quite scary, A massive US armada is heading for Iran, possibly to blockade benzene imports, hence shutting down the iranian economy. http://europebusines.blogspot.com/2008/08/massive-us-naval-armada-heads-for-iran.html

    “The US Naval forces being assembled include the following:

    Carrier Strike Group Nine
    USS Abraham Lincoln (CVN72) nuclear powered supercarrier
    with its Carrier Air Wing Two
    Destroyer Squadron Nine:
    USS Mobile Bay (CG53) guided missile cruiser
    USS Russell (DDG59) guided missile destroyer
    USS Momsen (DDG92) guided missile destroyer
    USS Shoup (DDG86) guided missile destroyer
    USS Ford (FFG54) guided missile frigate
    USS Ingraham (FFG61) guided missile frigate
    USS Rodney M. Davis (FFG60) guided missile frigate
    USS Curts (FFG38) guided missile frigate
    Plus one or more nuclear hunter-killer submarines

    Peleliu Expeditionary Strike Group
    USS Peleliu (LHA-5) a Tarawa-class amphibious assault carrier
    USS Pearl Harbor (LSD52) assult ship
    USS Dubuque (LPD8) assult ship/landing dock
    USS Cape St. George (CG71) guided missile cruiser
    USS Halsey (DDG97) guided missile destroyer
    USS Benfold (DDG65) guided missile destroyer

    Carrier Strike Group Two
    USS Theodore Roosevelt (DVN71) nuclear powered supercarrier
    with its Carrier Air Wing Eight
    Destroyer Squadron 22
    USS Monterey (CG61) guided missile cruiser
    USS Mason (DDG87) guided missile destroyer
    USS Nitze (DDG94) guided missile destroyer
    USS Sullivans (DDG68) guided missile destroyer

    USS Springfield (SSN761) nuclear powered hunter-killer submarine

    IWO ESG ~ Iwo Jima Expeditionary Strike Group
    USS Iwo Jima (LHD7) amphibious assault carrier
    with its Amphibious Squadron Four
    and with its 26th Marine Expeditionary Unit
    USS San Antonio (LPD17) assault ship
    USS Velia Gulf (CG72) guided missile cruiser
    USS Ramage (DDG61) guided missile destroyer
    USS Carter Hall (LSD50) assault ship
    USS Roosevelt (DDG80) guided missile destroyer

    USS Hartfore (SSN768) nuclear powered hunter-killer submarine

    Carrier Strike Group Seven
    USS Ronald Reagan (CVN76) nuclear powered supercarrier
    with its Carrier Air Wing 14
    Destroyer Squadron 7
    USS Chancellorsville (CG62) guided missile cruiser
    USS Howard (DDG83) guided missile destroyer
    USS Gridley (DDG101) guided missile destroyer
    USS Decatur (DDG73) guided missile destroyer
    USS Thach (FFG43) guided missile frigate
    USNS Rainier (T-AOE-7) fast combat support ship ”

    this crisis could escalate sharply 🙁

  14. VOLTAIRE (Francois Marie Arouet) 18th century French philosopher, wrote: “They are, all of them, born with raging fanaticism in their hearts…. I would not be in the least bit surprised if these people would not some day become deadly to the human race.” (Lettres de Memmius a Ciceron, 1771)

    Anyone care to guess who ‘these people’ are? The word ‘people’ is stretching things a bit.

    ‘Some day’ is just around the bend.

    Would you be raging with fanaticism if you knew you would be melted? (Ezekiel 22:20)

  15. http://www.kuwaittimes.net/read_news.php?newsid=MTAxNzA0MDM1Ng==

    “KUWAIT: The government is finalizing its emergency plan this week in order to ensure that the country is protected from foreign dangers in case the regional situation escalates and a war breaks out between Iran and the USA.”

    this is well worth reading as well, http://www.guardian.co.uk/world/2008/aug/09/russia.georgia1 , thousands of russian fighters pouring into south ossetia.

  16. “I don’t understand. Seems very contained to those areas that overbuilt. I live in laguna beach and there are foreclosures and banked owned properties here and there. Everyday I see more “for rent” signs on lawns (3 on my block alone – and they are taking a while to rent maybe due to poor credit). However, prices are still at the same level they have been for years- maybe a 3% decline at best. When if at all does this mess start to correct over valued homes in “desirable” places? (were they not as desirable 7 years ago when that house went for 600k instead of 1.1 today?)”

    I live in Fairfield County Connecticut right outside of NYC. Tons of Wall St and old money here. I agree with the comment above that prices here have fallen but only slightly. And this only took place over the past few months. When I see prices in these wealthy areas stable I sense things will get much worse. These needs to be a total purge and then we will have to wait 10 years for prices to go up again.

  17. Hi Dick,

    The ooze is creeping in. It is going from the more urban subprime epicenters that experienced the largest building growth and/or the lowest priced areas still in commutting distance to a major metropolitan population and employment hub to suburbia and finally to urbia. This is why the overall ‘Mortgage Implosion’ is unfolding in stages ie: subprime, Pay Option, overall Alt-A, lower grade Conventional Prime, Jumbo Prime and finally Prime mortgage Implosions.

    We are in early innings with the weakest falling first.

  18. Mr. Mortgage: Long time no see. My Chinese dollars was dropping like a stone. Same as my GOLD. Sigh… I hope you and others are doing well, at least, much better than me.

    Now, I am tired of living in an apartment, is it time to buy a foreclosure/short-sale house?

  19. Viv, US can not afford to take a 3-sided war, it is just as a dog’s biting.

  20. “this crisis could escalate sharply”

    I think this is exactly what the US gov’t wants. This crisis will not only help the dollar in the long run, this conflict would be the only thing preventing the dollar from tanking, holding off inflation, and keeping the USA’s strongest industry alive…(military/weapon’s industry).

  21. Mike Whitney scores another bullseye on the Georgia:Russia:Washington:Israel target:

    http://tinyurl.com/5qh39a

    Watch $50Billion of Freddie/Fannie bonds get dumped on the market.

  22. If the link doesn’t work, go to GlobalResearch.ca and click on News:Bush War for the Whitney article.

  23. Or try this one:

    http://www.globalresearch.ca/index.php?context=va&aid=9791

  24. I hope you are right EO. My gold shares have been getting pummeled lately. ; )

  25. Not looking so good for Downey. I’m surprised Mr. M didn’t report it before anyone else.

    http://www.marketwatch.com/news/story/downey-says-regulators-limit-some/story.aspx?guid=%7BE42720CE%2DB4FB%2D48E5%2D8959%2D9CE189BFFC2C%7D

  26. od, your gold will continue to fall unfortunately… it is no longer pegged to anything so it acts like a typical commodity (see oil). Once demand wanes as it has it goes back to whence it came…

    The recent goal, or should I say attempt, is to prop up the US dollar. Now on the surface it makes sense, but we all know where that leads us. Of what intrinsic value does a stronger dollar hold for the EU? Japan? UK? None I can personally think off. China perhaps…

    Well a recent 10 billion EU infusion of cash was bestowed upon us. Why? We are in a hugely deflationary period that far outstrips any inflation we have lurking about, and now a false prop up of our currency to do what? Stem the tide? Hold of the inevitable? Stave of a more pronounced collapse?

    There is nothing anyone or any country can do at this point to stop the bloodshed in diminished wealth for our country going on right now. NOTHING! Well short of them actually giving us money (which this 10 B was… a gift) for free. We must take the estimated by some amount of TWO TRILLION dollars in write downs and watch 100’s of lenders collapse in order to be done with this and start a new. That or watch many others go down with us while trying to foolishly save us… no options are good, but neither was our attitude over the last 7 years!!!

  27. A little run on the bank over at Downey???

  28. P.S.

    I was thinking something yesterday and I thought I would share…

    Why shouldn’t the mail be delivered only Moday – Friday door to door and delivered on Saturday to your box if you have one. Otherwise you wait until Monday. How much gas would that save? How much would we save in cities and towns on vehicles and vehicle maintinence etc. We would save a fortune as a country for a day of convienence…

    What say YOU?

    I say let’s start tomorrow and the only thing that I ask is that ALL OF THE SAVINGS be put into purchasing new energy conserving vehicles over time so we keep the momentum of savings and environmental issues close at hand as the ultimate goal here!!!

    Just my thought…

  29. where is Mr. Mortgage? Must be busy refinancing?

  30. […] Mortgage: June Home Sales Report & Preview for This Week’s ‘Official’ ReportsMr. Mortgage’s Guide to the TRUTH! » Record Foreclosures Sweep CA in July – Breaking New… on Dr Martin Weiss Confirms Views on WaMu and Wachoviafeng on Record Foreclosures Sweep CA in July […]

  31. 1 million barrel of oil supply is basically offline now due to the conflict in the causcuses. The russians are now on their way to invade the capital of Georgia.

    JP Morgan reports a 1.5 billion dollar write-down

    Home prices have fallen 10% plus in the UK so far this year.

    Downey and vineyard national are in trouble.

    yippeeee, this means time for a market rally! 300 point rise and gold falls to 750 and oil falls too 100! what a merry day 🙂

  32. War is Peace.
    Black is White.
    Hate is Love.
    Big Brother Loves You.

  33. […] Record Foreclosures Sweep CA in July – Breaking News […]

  34. I figured the priced would hit the fan in SoCal so I sold our house in September of 2004. I got top dollar for it. My mistake was staying in the mortgage business. Should have been selling houses instead. I’m out now in a totally different business, and selling foreclosures to cash buyers on the side.

    The one rule in buying and selling assets that I live by: When the grocery bag boy is talking to the checker about buying (gold, houses, insert whatever here) while you are standing in line, then it is time to start selling.

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