Mr Mortgage – September CA Foreclosure Report

Posted on October 13th, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

Due to the new CA Law, BS 1137, Notices-of-Default (foreclosure starts) and Notices-of-Trustee Sale  (2nd stage of foreclosure) plunged in Sept.  In a nutshell, this law put a few extra steps on the banks prior to filing a NOD and NTS. Due to this, an in-depth analysis of September’s CA foreclosure activity will not be provided this month.  However, you can take a look at the September charts below and a few of my previous reports (links provided below) and draw your own conclusions.  From my internal analysis, actual defaults and foreclosures remain near all-time highs and this new law just pushes out the problem a month or two.

As soon as the banks are back in full compliance and pumping out NOD’s and NTS’s once again, which will likely be within a few weeks, I will be able to furnish you with more data. -Best Mr Mortgage

(data brought to you courtesy of Field Check Group, Real Estate & Finance)

Notice-of-Default by Month – Note the plunge in Sept due to SB 1137. As you can see before the plunge in Sept, defaults were hanging near their all-time highs despite Subprime defaults being down 25-30% throughout CA.  This is proof-positive that the default crisis has jumped tracks to higher paper grades, which I can see clearly when I break these defaults down on my internal systems.

Monthly Actual Foreclosures/Bank REO – Actual foreclosures are down slightly from the peak but still near all-time highs. Never discount seasonality when reviewing this. Also cancellations are increasing, which have to be added to this figure (shown below).  Remember, 95% of all foreclosures are bought back by the foreclosing entity due to lack of 3rd party interest.

Monthly Foreclosure Cancellations– Note the increase in Cancellations below as Foreclosures above decrease. This means that despite headline foreclosures decreasing, foreclosures in the pipeline have not really moved down as much.

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33 Responses to “Mr Mortgage – September CA Foreclosure Report”

  1. Mr. Mortgage said: It is my impression this new law just pushes out the problem a month or two.

    Ain’t it just great on how governments relax rules, regulations and oversight just so they can make the news sound better. What the hell ever happened to telling the truth???

  2. What causes seasonality in foreclosures?

  3. 5755hsa — At this point we can expect all manner of changing rules in order to protect those who were irresponsible at the expense of responsible, sensible people. I still believe that many of these people don’t want to save their homes, they want an investment that appreciates at 20% every year. Nobody is being made homeless by foreclosure; they can just go rent at less expense.

    JAllen

  4. Interesting how the downturn in foreclosures is timed to take place just about the time of election in California… this way the current officeholders can say to their districts… we took action… reduced foreclosures… WE ARE MARVELOUS! cast your vote for me.

  5. all this is BS! countrywide which is not own by BOFA they are the shot caller they just leave the name for now countrywide they where sued by 11 states by the help of attorney genereal line jerry brown and some other states attorney general’s. anyways this banks and lenders are still buying time they make settlements and modify or restructure homeowners who’s distressed or on the brink of foreclosure what this lenders or banks do they fixed it for 5 yrs % only they stil buying time make look there helping homeowners lower there monthly amortization still they still paying interest only nothing goes to principal they dont want to take loss or do write down evendo they where bail out but the BS! govt i mean the current administration. so after that small 5 yrs interest only modify which is interest only then it will go up again so how would homeowners could afford if the 5 yrs is over again? stupid lenders and banks.

  6. Many states are now looking into a 90 day moratorium on foreclosures in hopes it will give this new bill a chance to save more people in their homes. The “TRUTH” of the matter is nothing in any of these proposals assist homeowners one bit. No jobs are created and no reductions in payments are being made. The politician’s ultimate plan if you look closely is to “TRAP” homeowners into changing their loans to lesson their monthly bill, but not the balance. They just want you to push that out is all, and by the way now make it a recourse loan. They want debt slaves and it is obvious to anyone that is looking for it. Socialist ideals prey on the lower and middle class to be beholden to the Government for assistance. These folks will cry for welfare checks, food stamps and heat vouchers. They will vote into office who ever gives it to them because they have no choice. This was all a carefully orchestrated event by the looks of it that will snare 20% or so of the Sheeple. The rest will be tossed to the wolves, but at least they won’t be broke for the rest of their lives. Off course they will offer some new bail out plan for these folks eventually and at some point another 20% will get snared. Until at last there are 40% – 50% of the populace left beholden to Government for everything from food on their tables to healthcare and everything else one takes care of on their own today. A beautiful orchestrated plan of socialism at it’s finest. It all started with mortgages with Fannie and Freddie and then crept into insurance with AIG and next the banks and now they are coming for YOU!!!

    BRAVO!!! BRAVO!!!

    Encore anyone?

  7. This data glitch comes at a bad time.
    I want to know how the banks will fare from here. I prefer capitalization to buying junk assets, however, with the accounting change the banks can leave that stuff in level II & III (as Mr Mortgage carefully detailed a few days ago). In the meantime they ‘have’ to lend money out, although one hopes they get more bang for their buck because of fractional reserve banking. But housing prices are still in free fall, and foreclosures, despite today’s article, are almost certainly on the rise and the global recession is just picking up steam.

  8. dt, didn’t you read that Fannie and Freddie are buying all of that garbage up at $20 Billion a piece from now until… well who knows? The banks are getting the best of both worlds here. Once Paulson et al discovered they do not need to use the $750 bail out fund to buy toxic assets because F&F could do that already… We own them!! They can do anything they want. There oversight is the Fed and Treasury. So now with $750 burning a hole in their pockets they figured just give cold hard cash to their buddies on Wall Street. Toss another few hundred billion to the FDIC and oh yeah… the little people may want some of that too. I know… I know… Let’s do ANOTHER 150 Billion bail out for them!!! Oh the Sheeple will love us for this one!!!

    It just doesn’t get any better than this!!!

  9. I will tell you how the banks will do from here… horrible. The reason is the same reason Socialistic societies never last. By their very nature they end up killing the goose that is laying the golden eggs.

    The money these banker buddies make is off of the backs of the little people. If they force tem to be dependent then how the heck are they going to make money off of them? They are of no use if they are indebted to the same folks who want to keep robbing them. They have nothing else to take.

    No loans means there is no more money to be made by the banks. No money means more bailouts until their just isn’t anything left and we all crash and burn together… swell idea huh?

    That is a very large reason this will not work out well in my opinion. It is fast reaching the point where those that need money can’t afford the cost to borrow it and those that can don’t want to go further into debt. That leaves a very small pool to squeeze for revenue. Not nearly large enough to meet the returns their lenders are looking for or the people running the show to get their millions upon millions of bonuses. That is when it all breaks down, once this is realized by the very people pulling the strings. They have pulled one string too much this time I think!!!

  10. Thanks MM. Great work yet again. The market cannot be denied. Delay, yes, denied, no. I love this stuff.

  11. I must apologize for my rants of late but I am so beside myself with all of this BS. I have been following this market extremely closely for many years now and play in it as well. I have never in my lifetime, and I am not all that young, seen the wastefull spending done to right an economic ship. Much of the moves the Fed and Treasury have been making are that which would come out of Dinsney Land script. Now I understand the educational background of these men, but that doesn’t mean that they have even 1 ounce of common sense. If I have learned nothing in my life it is that common sense almost always wins out over every other possible measure (unless really scientific which this is not). That is what infuriates me beyond belief.

    If one were to make a list of needs in this country I would not have had bailing out the top banks in the country on that list and that is for sure. That move wouldn’t have been on my top 25, but hey what do I know. My feelings to stimulate an economy are less Government and less bailing out if you will. Sometimes things just need to falter and that is OK and just part of life in my opinion. There is plenty of money out there for those that can afford it. Nobody I know in my age and in my circles is not going out to eat and where doing the same things that we were. We have money and where secure. If I go to the bank for money I get it. Many more people get it than don’t get it. We are not in a situation that is nearly as bad as they would have us believe. Look at the sports venues on TV and do you see sold out crowds or at least huge crowds everywhere you look? That is correct CA, AZ, CHI, FLA, GA etc.

    This is somewhat perplexing to me that we are in such dire straights but yet when I go out to eat I wait in line still. When I go to a new movie if I am not early enough I turn and leave because my seat will be terrible. I go to any bar on any Thursday-Saturday night and they are packed. So what gives?

    Here is what I do see:

    1. Builders who over built the housing industry by virtue of new, and conversion projects. They are not selling and they are in trouble.

    2. Auto sellers chaulk full of unsold new cars that they overbuilt and they are also in trouble.

    3. Banks who over lent due to bad business moldels and greed who are now in trouble.

    4. A restaurant industry who chain stored oursleves to death and are now in trouble.

    5. Pretty much any business tied to housing that had a lousy business model is now hurting.

    Well doesn’t that tell us something… smarten up folks!!! Your business model sucks and your now taking it in the shorts. Maybe you should not have given so much of your profits away in dividends and bonuses you think? Maybe you should of reinvested in the tools to determine your flight path so this didn’t happen you think? Perhaps you should of just slowed the F down and took a good look at where you were actually heading you think?

    Here is what we need as priorities and not in order bcause we need them all.

    1. Jobs.

    2. Manufacturing growth.

    3. A clear economic picture ahead (yes that cost money to develop).

    4. Savings.

    5. Unemployment benifits to extend 52 weeks (so this happens before their time runs out).

    6. Infrastructure repair.

    7. Increased taxes (at some point to pay for what these current people have screwed up already).

    8. Social security gets back on track and placed in good shape moving forward

    9. Medicare and Medicaid are placed back on track and in good shape moving forward.

    10. Have a clear and defined plan to stop illegal immigration and create jobs while doing it (hey we must absorb the military about to start coming home in waves who will need something to do)

    Nowhere are their bail outs for banks and lenders. Nowhere are there plans to buy insurance companies and own homes via Fannie and Freddie. We need some sound and simple policies coming out of Washington and let’s stop this bail out nonsense that creates nothing and only lines the pockets out of the less deserving when compared to the American Tax Payer who’s money it is after all!!! I want my candidate to say the right thing for a change and not give me lip service, rhetoric and spin. I want new blood in Washington and I ask all of you to join me in voting all incumbants out of office in 2008. Let’s start with a clean slate and light the coals and keep them lit for these newbies. Make them work for us and not the lobbyist. Make America a proud and prosporous country once again. We can do this, but I need full support from everyone in this country to do so (well at least 51%). Pass the word please…

  12. Stu,

    Do you think this is all a mistake? No way. Look at Bernake. He completely understands Depressions. He and Paulson are doing everything in their power to create one. Even a highschool econ teacher can tell you that the more a gov’t throws money at a recession, the worse it gets. This is exactly what made the last one so damn long.

    You fail to realize that all these bailouts will lead to the destruction of our currency. The Fed wants hyperinflation to pay down it’s debt, strangle 70% of the US population into poverty and dependence on the Fed gov’t,thus paving a road to a national socialist system. (Fascism)

    This country is walking a very fine line right now. Too bad most Americans are too stupid to realize it, and are more worried about the “Arab boogy-man”.

  13. od, I don’t agree with you. I think there is a plan by some for socialistic movements, but not the whole. I think Ben has gotten too much credit for his studies and not nearly enough blame for his execution of how he in fact interputed those studies. History will not be kind to Ben.

    Throwing money at a problem can in fact assist in its fix if done the right way. We fail dismally in education because of the way in which we throw money after it and worst yet tenor to exist. These are not judges but rather teachers of our very own chldren. We should have a say directly in who is educating our children period. There is no other way in my opinion, but yet we don’t. Why?

    This socialist movement is trying to cradle 20% – 30% of our electorate and tie them up as debt slaves I totally agree, but that still leaves 70% left to fight them down. By voting each and every incumbant out of office that we possibly can we take one giant babe ruth swipe at the talking heads and clear the bases clean!!! Just like that in one day we change everything. We remove the spinsters and life long, entrenched, some bought, others semi bought, long line of corruption and a history of failure. One day is all it takes… one simple, easy day!!!

    Maybe this electorate will surprise you this year. I think many more people than you think have had enough. Many, mnay folks out there are just plain fed up with it all!! They are going to have their chance to have their say and change things. Time will tell if they remain in the background gazing as Sheeple or finally stir up the pen and break open the gate to come charging into the voting boothes. Only time will tell…

  14. Stu, that is quite a rant!!I think you’ve got a point. Notice the looks on the faces of the politicians as they talked about the rationalizations for signing off on the legalized theft? They looked really scared, like this could bite them in the butt, big time. I know I will be voting against them no matter what.

    On another note: I buy gold coins on and over the years. I have not been able to get them anywhere in the country for about 3 weeks. It’s wierd. Major accumulation and hoarding taking place.

  15. Stu,

    I still stand by my 70% who will be thrown into poverty. No wait let me change that to 90%. Here is a stat that will scare you. Only 10% of Americans make 100k+.

    Granted, in California, that is middle class these days. Throw in exponential inflation, higher taxes, and fewer jobs (everything coming down the road) I think you will agree that if you don’t make at least 100k/yr you are in the lower class.

  16. I’d be surprised if even 50% of those who make 100k/yr have 100k in the bank.

  17. od, I’d be surprised if 10% of the people who make 100k/yr have 100k in the bank. The only folks who save are those who were raised by those who were exposed to the Great Depression, which means you have to be probably at least 40 or over or were born to older parents (like I was). Saving has not been valued by this generation who used their home as a piggy bank.

    This latest bailout, the upcoming Obama tax increases, the likely multi-year recession (folks, the auto industry has probably pulled the next 4 years of sales into the last 2 years and they are a bit of a barometer) and inflation will obliterate what is left of the middle class.

    For the last two years I saw us getting dangerously close to being a country like France, thinking however that there were more rational folks out there who prevent us from becoming France only to realize that we are a country of lemmings who want handouts and don’t want to work.

    The most disappointing thing about growing up is realizing that 90% of the people in this country are too stupid to figure out what is really going on and can’t prevent what is about to happen – it gets depressing.

  18. I’ve always been saying we are just catching up to Europe. On a positive note, when you are taxed that much, you learn to live more and work less. ; )

    I’m a professional artist, so I’m an anti-rat-race kind of guy.

    IMO Americans are over worked, underpaid, and get less for their tax dollars. If I’m going to live in a socialist society, I better get free health care, free college education, and enjoy 2 months worth of paid summer leave.

  19. od, you cannot possibly be serious… 90% in poverty. Do you know what this country would look like if that were to happen? Rwanda is what it would look like. You must live in one of the wealthier states because if you travel across this country then you would quickly realize 30K – 40K per year can have you living quite comfortably in a lot of places throughout this country. Only 10% make 100K as individuals, but how many families make 100K combined? It is a lot higher than 10% I can tell you that. What is the median house price today in this country? 200K? Well if you are making 40K -50K combined and you put down 20% or 40K then your mortgage is 160K or 35% of your income. What is a matter with that? That is where we need to be, but have not been for a number of years. Look at L.A. with a median income of 50K-60K but a home price median at peak of close to 500K. That is wrong and unsustainable and everyone knew it.

    We are going to be fine once fundamentals get back in line (rent/own – Income/mortgage) if we can keep the damn politicians out of this. They are currently doing a real good job screwing things up however. The more they get involved the longer and more costly this will be to the middle class as usual. That is why we need to get these career politicians out of office. They obviously think they know best and know better when they really do not have a clue on what needs to be done. They ask for transparency from the financial world when they do not offer it themselves. Our Government’s inflation report is a joke and so is the birth rate model when used for unemployment numbers. We need Government that practices what it preaches and doesn’t talk out of two sides of their face. The American people can fix this problem if given the tools and truthful information on what is really taking place. You know that word they keep throwing around… transparency. Yeah, how about some of that Washington!!!

  20. Stu, I agree that it’s hard to believe , but out here in CA, it’s a reality. It’s not only housing that is causing this. Taxes (including inflation) is also the symptom. Maybe the rest of the country isn’t realizing the new middle class income level yet (100k), but at the rate inflation is going in this country,(see shadow stats: http://www.shadowstats.com/article/292 )
    You better start accepting this reality, or be prepared to find yourself in the olower class very, very soon.

  21. “Do you know what this country would look like if that were to happen? Rwanda is what it would look like”

    LOL, have you been to LA lately?

  22. http://biz.yahoo.com/rb/081015/business_us_wellsfargo.html

    Why does WFC always seem to be ok on its quarterly reports, understanding they have toxic sludge hidden in their closet?

  23. WFC has gotten away with pushing it’s non-performing HELOC’s further and further out on the time line. But the US Govt has told banks that they can mark the value of outstanding mortgages to myth. So evey bank is HIGHLY incented to not have their portfolio loans default. Because they cannot hide a default, but it looks like regulators, remember them, will let the banks do everything else with these loans. I cant believe people with outstanding mortgages have not figured this out and call the lender to renegotiate the loan. The lenders will do just about anything to avoid a default since that is the only thing they cannot get a “pass” on from the regulators.
    A friend has MS as his lender, his ratio slipped and they called him the other day. He said to them,”I dont think you should push me on this right now.” And they said,”Just checking up on you. That’s all.” Hahahahaha

  24. od, the fact of the matter is that in CA it is not a reality. That is why prices have fallen 41% in your state. Yes I have been to LA, SD and SF of late. They all seem to be very robust in the areas I was in. I have several friends in those places as well, all of which are doing very well I might add. Most are in the SD area however. I am not sure you know what poverty looks like because if you have been to Jamaica, Dominican, Haiti or other places such as these (in the villages) and brought them to LA they would think they have died and went to heaven. LA hardly appears impoverished and I have been all around LA. Is it dirty and is there a lot of graffiti in many places… sure. Are their areas that are in poverty that are no different than many others around this country? Absolutely! Roughly 12%-15% of the people in this country are at or below the poverty line, but that is a far cry from 90% as you suggest. We would have to have a 40% – 50% unemployment rate and no Government assistance of any kind to get where you suggest. Even at that it would take many, many years to get there. You also suggest 100K as the middle class income which is ridicules. That would suggest 400K would be the median house price. With 80K down that leaves 320K or roughly 33% of your income. We are not even close to that in this country. Heck in probably half the states or more there is no where near the infrastructure in place to have nearly enough jobs to pay those kinds of salaries to even 10% of the people. Please don’t get me wrong because I am infuriated at what is happening, but let’s not make it into something it is not. You sound like Paulson et al sounding the sirens to get Congress to roll over (which they did the fools)…

  25. Stu,

    Thanks for the perspective. You make me feel like a rich man. ; ) Funny how a six figure income only gets you a 2bed 2 bath place in CA. We have a long, long, long way to go in prices dropping.

  26. Mr. Mortgage

    Great info as usual.

    But, we REALLY need an update from your April “Look out for ALT-A’s”.

    What’s the scale and timing of ALL of this level 2 stuff?
    In a housing sense.

    Thanks.

  27. WOW ! Here’s the funny part.

    Right now, as we speak, we are supposed to be doing our supervisory inspections of all of the nation’s banks in order to establish that we are capable of meeting the stricter capital requirements of Basel II.

    That is not a joke.

    It reflects back to Stu and od and their discussion of impending socialistic kinds of things.

    Y’all have heard of the Jeckyll Island cartel of the monied interests in shaping the reports of the National Monetary Commission to recommend our current federal Reserve Banking system.

    This FED system utilizes a debt-money based fractional-reserve lending system that, in theory, multiples itself to the benefit of the private bankers who make up that debt-cabal.

    Now, if I follow the aforementioned duo, we are to think that these robber-baron, money-power capitalists, that are enslaving the hard working people of America with their debt-money system, are somehow socialists.

    I have to get off there.

    The progressive politic of the time mostly made up of democratic-farmer-labor parties, had proposed a publicly-controlled, debt-free money system.

    They weren’t socialists at all, but they would be called left of center politically. They believed that the government had a major role to play in the area of money creation and monetary policy.

    This debt-free, public money proposal was made again by FDR’s brain-trust on the money system, after the FED failed to prevent the 1929 crash. The Chicago Plan was fought by the bankers and shelved.

    Which, after the war, and US supremacy, brought us to the Bretton Woods accords that tied all of the industrial democracies, and others, into this debt-based money system and fractional-reserve banking.
    All of it based on the $USD.

    Which has brought us to today’s discussion.
    Amid the plan to move us all to Basel II.
    Hang on to your Constitution.

  28. ITS THE ARTIFICIALLY-INFLATED HOUSING PRICES, STUPID!!

    Now lenders are not selling properties at 50 cents on the dollar because they are hoping the Government will now buy them at 80 cents on the dollar!!

    WTF??!!

    How can our goverment think that the solution is keeping housing prices propped up??!! As Peter Schiff says–AMERICANS ARE BROKE, and until house prices come back into line with historical fundamentals, IT WILL NOT MAKE SENSE TO BUY!!!
    Also, with mortgage rates now rising, how the world will they move houses??

    Makes NOOOOOO Sense.

  29. Mr. Mortgage, You seem to like stoking anger against Govt. All the posted responses prove it. The truth is that the decline in foreclosures was predicted by Deutsche Bank reporting almost a year ago. This prediction was backed up by other sources. All pointing to the 2 to 3 year mortgage resets decreasing which originated in 2005 and 2006. Furthermore, the prediction also points to a surge in defaults in about two more years from now, when the 5 year teaser rates are due to reset.

    Since the bill you talk about (SB1137) when into place the banks already starting complying before it was enacted. As if the banks would wait until after the bill passed then change how they notice the defaults. All the bill does is ask for an additional 30 day notice to make contact. So, the decline has nothing to do with new laws, its the market.

    Also, there are new programs implemented by banks to save their exisitng loans by negotiating a low fixed rate for 30 years and insured by FHA.

    Are you really in the lending business or are you just a college grad in Karl Rove journalism?

  30. AC – with all due respect you are sorely mistaken. Subprime was only the proverbial canary in the coal mine and due to crashing house prices and over leveraged home owners, they are choosing to walk away as their most efficient way of quickly de-levering. This is across ALL paper types. I can track the rate of subprime/pay option/traditional alt-a/jump prime/prime conventional defaulting in real time by lender and can promise you that a) the subprime problem is abating b) all other paper grade defaults are surging. Remember it takes a year to actual foreclose on a property therefore most of the actual foreclosures seen to date are only from the subprime universe…we have a lot of pain to go. S&P agrees with me. Deutsche Bank report is old news and reflects barely any drop in housing prices. Since, median prices in harder hit states are down 40-70%…this makes their report worthless.

    S&P on Alt-A and Jumbo Prime

    http://mrmortgage.ml-implode.com/2008/10/15/sp-doing-the-nasty-on-280-billion-in-alt-alargest-ever/

  31. Mr. Mortgage, Of course there has been A-paper defaults. But what do you think someone with a 700+ FICO will do after they destroy their credit? Wait for several years to build their score. Or buy another house before defaulting on their “over valued” home. Of course the latter. But, the practice of buy and ditch has all but been eliminated with the stricter guidelines. Strike 2. Try again.

  32. I read a book called “Mortgage Meltdown” and it really helped me understand that I’m not the only one going through this. I was also able to apply for a grant from a non-profit to help me with my mortgage. I think anyone who is trying to save his or her home, like me, should read this. Go to http://www.48grant.com

  33. […] Will Solve Everything…They ThinkS&P Doing the Nasty on $280 Billion in Alt-A…Largest EverMr Mortgage – September CA Foreclosure ReportUS Banks Are Not Alone – Global InsolvencyAmerica’s Mark-to-Model (Level 2) Banking […]

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