ForeclosureSput out an update earlier this week reporting that foreclosure starts (Notice of Defaults) had dropped on a national level from July. This was amateurish on their part because NOD’s keep coming in through the first couple of weeks into the following month. At the time they released this news, it would have been impossible to tell the count. Estimating is not a good thing in the data business, which is obviously what they did.
Then today, Realty Trac put out data showing NOD’s were up, Notice of Trustee Sales had dropped and actual Foreclosure Sales were up. I don’t agree with them according to my data. Honestly, I don’t think they know how to tell the difference between the doc types.
Throughout this whole process we have seen many false bottoms. I believe we have one here with these two reports. I will have a full-blown foreclosure summary out Monday. Until then, here are my preliminary findings for the state of CA. As goes CA, so does the nation. CA represents about 35% of all foreclosure counts and 45% of the national dollar amount.
- Notice-of-Defaults (NOD): Up approx 1.5% hanging well over 40k per month.
- Notice-of-Trustee Sale (NTS): Down approx 10% but still at the second highest level on record.
- Foreclosure Sales at Auction: Down approx 10% but at the second highest level on record.
- Cancelled Auctions: Flattish at highest level on record.
We have seen these numbers gyrate 10% per month many times. The fact the NTS and Foreclosure Sales at auction dipped slighltly from the pervious month means nothing at all. Perhaps banks are putting off the second and third foreclosure stages hoping the new FHA bailout program will help these borrowers. Or, perhaps they are so overloaded with REO they extended things out. I will drill down into it more next week.
What is important is that NOD’s have remained at the highest levels on record and cure rates from the NOD stage to the actual foreclosure stage have plummted because folks can’t refi or sell their way out of foreclosure any longer. Also, values are down so much, they just have no interest in saving their home. In addition, it is important to note that fewer subprime foreclosures are happening by far and the void is quickly being filled with Alt-A and Prime. That is a serious problem.
Finally, how foreclosures impact the housing market is relative to overall sales. Even is foreclosures lighten up but home sales fall and prices along with it, the housing market is not improving and values fall can spark defaults in higher paper grades due to the negative equity effect.
Please review last month’s Monthly Foreclosure and Home Sales reports if you have not done so already and I will be back at ya on Monday with the full report…have a great weekend.