Foreclosure Numbers | A bit of a surprise
Foreclosure numbers–A Comparison
We often hear the numbers and think how bad it is. What if you look at the opposite side? How bad is it?
There are approximately 61,800,000 homeowners in the US
One third, that’s 33%, of US homeowners own their homes free and clear—that’s right, no mortgage.
Nationally, 3.4% of mortgages are in foreclosure (approximately 1,400,000). This percentage is only measured against homes with mortgages. That means that 96.6% (approximately 41,200,000) of homeowners with mortgages are not in foreclosure.
Of all the homeowners in the country 60,400,000 (or 97.7% of all homeowners) are not in foreclosure.
Of course, on a home-by-home, family-by-family basis, any foreclosure is a crisis. But, the numbers from a statistical “big picture” standpoint need perspective.
Related Link: The Inventory Of Foreclosed Properties Has Begun To Shrink…
Note: A property moves into the foreclosure inventory when the mortgage servicer places the property into the foreclosure process after serious delinquency is reached and remains there until the foreclosure is completed. Calculations assume that information provided by CoreLogic is accurate. Some variance is numbers results from rounding in calculations.
The Inventory Of Foreclosed Properties Has Begun To Shrink…
This is a great explanation and graphic concerning the states that are most impacted by seriously delinquent mortgages.1
Tie this to the concept that the “normal level” of distressed housing inventory is under 5% (REALTOR® Magazine January/February 2012 “Clean Slate”) one can see that there are specific areas of the country with ongoing issues, but that there is improvement.
“The inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing. While foreclosure filings are being curtailed by a variety of judicial and regulatory constraints, mortgage servicers are completing REO sales faster than they are completing foreclosures,” said Mark Fleming, chief economist with CoreLogic. “This is the first time in a year that REO sales have outpaced completed foreclosures, and part of the reason for the decrease in the foreclosure inventory.”
According to our analysis, for 2011 completed foreclosures totaled 830,000 compared with 1.1 million in 2010. In December 2011 there was a month-over-month decrease in completed foreclosures to 55,000 from 57,000 in November 2011. The December 2011 completed foreclosures figure was also down from one year ago when it stood at 67,000. From the start of the financial crisis in September 2008, there have been approximately 3.2 million completed foreclosures.
Nationally 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the foreclosure inventory as of December 2011. The foreclosure inventory is the stock of homes in the foreclosure process.
*A property moves into the foreclosure inventory when the mortgage servicer places the property into the foreclosure process after serious delinquency is reached and remains there until the foreclosure is completed. The foreclosure inventory is measured only against homes with an outstanding mortgage, rather than against all homes. Nationwide, roughly one-third of homeowners own their homes outright.
1Reprinted with permission from TICOR Title, Corvallis, Cheryl Summers
Foreclosure Facts | The Local Story
The following are some “local” fact for the Corvallis and Albany, Oregon area and surrounding markets.
It’s very interesting to see a comparison between 2009 and 2010 figures for the number of foreclosures. Some communities have obviously been more impacted by job loss and down-turn than others.
I think this is a pretty good explaination of why the Corvallis market is a little more stable than some of the other markets and why it’s difficult for buyers coming from other regions of the country to understand our market. It also clearly demonstrates that there are some good buyer opportunites out there.
| TOTALS | |||||||
| Benton | 2009 | 2010 | |||||
| Total sales, incl. foreclosures (approx) | 1004 – 1100 | 1109 – 1200 | |||||
| Total foreclosures | 64 | 80 | |||||
| Total foreclosures (Corvallis) | 27 | 33 | |||||
| Total foreclosures (Philomath) | 9 | 17 | |||||
| Total foreclosures (Monroe) | 5 | 10 | |||||
| Total foreclosures (North Albany) | 15 | 17 | |||||
| Total foreclosures (Other areas) | 8 | 3 | |||||
| Linn | 2009 | 2010 | |||||
| Total sales, incl. foreclosures (approx.) | 1502 – 1700 | 1692 – 1900 | |||||
| Total foreclosures | 330 | 453 | |||||
| Total foreclosures (Albany) | 135 | 173 | |||||
| Total foreclosures (Lebanon) | 87 | 139 | |||||
| Total foreclosures (Sweet Home) | 39 | 69 | |||||
| Total foreclosures (Brownsville) | 17 | 14 | |||||
| Total foreclosures (Harrisburg) | 20 | 22 | |||||
| Total foreclosures (Other areas) | 32 | 36 | |||||
Note: total sales has approx. a margin of error due to the way sales data is aggregated and stored by third parties
Information provided by First American Title
Buyer Question: Is this property a foreclosure or short-sale?
Every so often I am asked if a property I represent is a short-sale or a foreclosure.
I’m always curious about why they ask…
Typically, it’s for one of two reasons
1) The interested party doesn’t want to invest the time and energy in a “distressed” property
or
2) The interested party is interested in getting a “really good deal”.
Both positions have some very valid points and are reasonable positions to take.
A few points to consider:
- It can take months to get the lender to respond to a “short sale” proposal. (Which can take the buyer out of the market (passing up other potential properties while waiting, but there are ways to work around this issue).
- Some lenders are taking a pro-active position and getting their “short-sales” pre-approved during the listing period.
- Some “short sale” offers sit and the property goes to foreclosure anyway.
- The condition of the short sale property can change during the wait.
- Distressed properties are often not as well maintained as non-distressed properties due to the economic constraints of the owners and/or other issues during the period between default and the lender take over.
- Some lender owned properties deteriorate during the vacant period between the time the former owner moves out and the time of sale.
- Some lender owned properties may be conditioned on an “as-is” sale.
- Some lender owned properties were never owner occupied. Leaving a question mark as to maintenance and care.
- Some lender owned properties are not financeable.
- Some lender owned properties are offered to the market with incentives.
- Lenders have an obligation to their share-holders to recover as much as the market will bear when they sell their REOs, which may make it difficult to get that “great deal”.
- Some lender owned properties that are aggressively priced are seeing multiple offers, limiting the “good deal” factor considerably.
- Some short-sale and/or Lender owned properties are a great fit and/or investment for buyer and the transactions work out fine.
I know that there are a million good and bad stories (which in turn can create a million more points to consider…) Anyone considering buying a distressed property would be well served to get some good advice, do their homework and go into the process with eyes-wide-open.
I’ve Been Thinking…About the Recent “Foreclosure Fraud” News
I’ve been thinking about “Foreclosure Fraud” on the part of lenders…
There has been a great deal of talk in the news lately about what appears to be “Foreclosure Fraud”.There is chatter all over the news about some employees in some financial institutions that have stated that they signed documents impropertly that were then presented to the courts in foreclosure cases.
Some of these documents were the documents that prove the lender owned and had the right to foreclose on properties in default. There are 23 (those that require judicial approvalof the foreclosure–some states have provisions for both non-judicial or judicial mortgage documents may be an important factor in this issue) states in which at least one lender has put a hold on the foreclosure processes. There are several major lender/servicers (JP Morgan/Chase, Bank of America, GMAC) invovled in the problem and investigations. And at least one title company has decided it’s too risky to issue title insurance on foreclosed properties being sold by these lenders, at least until the facts and details shake out and the mess is cleaned up…
It’s really not a huge suprise to anyone that knows how a loan servicing department works and how the paper flows in large institutions that this could happen, especially on the heels of such huge volumes of new loans in recent years, the volume loan sales and the take over of lending portfolios by large lenders by other lenders as a result of the banking/lending melt down.
When a loan is made it is made in the “name” of the lender. When a new lender aquires the original lender (“note holder”) those assets (loans) are transferred to the new lender. There is a document (I’m familiar with the term “Assignment”) signed by the lender of record to the new lender. This is a one page paper form, signed and notarized, sometimes recorded in the county in which the property is located, sometimes not. Every time a loan is transferred, this paperwork is completed. Imagine the paper chase when the same loan is sold/transferred multiple times. Same thing happens when a lender “takes over” another financial institution. Given that major players like Washington Mutual, Countrywide and SunWest were absorbed by other financial institutions as a result of the banking melt down, it’s not surprising to learn that there is a ton of this kind of paperwork out there. Nor is it surprising that mistakes were made.
When a lender forecloses a property, the lender needs to document that they are the true lender and that they have a right to foreclose under the documents they hold. What they cannot and should not do is “make up” those documents because they cannot find the actual documents.
There is a standard of practice and legal systems are in place for a reason. There are processes and procedures in place to protect consumers from unscrupulous practices. A foreclosure is a serious event in a homeowner’s life with long term financial repercussions. When lenders create situations that compromise the ability of staff to perform at reasonable levels and do the “due dilligence” that’s required to perform the job properly, there should be ramifications.
The fact that at least one title insurance company considers this situation enough of a risk that they are unwilling to isnure over it is an indicator of deep problems. The fact that several lenders and a number of states are involved is enough to get my attention.
Frankly, I think that they’ll find that it’s a bunch of clerical hassle; that there are some loans being serviced and “owned” by lenders that can’t prove it today, but will eventually find the paperwork and I seriously doubt that there were be reversals in foreclosures as a result.
The bigger concern is the ongoing issues that spring from poor lending practices and the ramifications of those actions on the confidence of the public and the negative impact on the recovery of our economy. And, the even bigger concern is the erosion of the ethics of employees and employers that create an atmosphere where it’s “OK” to fudge the truth in order to get the work done. Just find the forms, do the job right!
If you are a homeowner facing foreclosure, I strongly urge you to get some pre-foreclosure counseling. There are non-profits that may help. Learn your rights and the ramifications of the actions you choose. Also, use caution when responding to solicitations from parties offering to “help” for a fee (there’s a lot of scammers out there…)
And what else can this affect? Well, it could effectively slow down the market… inventories of foreclosed homes could sit while the paperwork is being sifted through. Not what’s needed to make a robust real estate market, but maybe what’s needed to heat up a political campaign or two.
Related links:
Willamette Neighborhood Housing/Foreclosure Prevention Workshops
News about the issue:
List of judicial foreclosure state and non-judicial foreclosure states (it’s all about the note and the provisions of the mortgage or trust deed.
and there’s a ton more out there…
What Exactly is an REO Property?
REO property is often a bargain for the real estate investor
What is REO property? REO (real estate owned) is property which has been taken back by the lender, it is “real estate owned by the bank/lender). It’s a property in which the foreclosure process is complete. REO properties may sell for less than comparable real estate listings because the lender needs to get the property off the books as a non-performing asset (they don’t make money on the property while it’s sitting and they are not making money on the loan that is in default).
However, the lender’s goal is to recoup as much of the loan as possible. In many markets today, the loan could be as much or more than the property is worth. The lender is going to take a loss, the questions is, how much? The lenders job is to limit the amount of loss that they incur. The differences between REO property and foreclosure or short sale property are:
- REO has already been acquired by the lender typically after a failed foreclosure sale or foreclosure auction (the bidding process at the court house steps often fails to produce a buyer. It’s risky to purchase a property in those circumstances. In a short sale, the lender does not own the property, it is still owned by the distressed homeowner (but, could easily become an REO property). We’ve seen the decision making process take so long on a short sale, that it became an REO.
- The REO is owned by the bank (or lending institution) and is listed as an asset on their balance sheet. In a short sale, the loan is owned by the bank and may or may not be a performing asset on their balance sheet, depending on if the owner is still making payments.
- In the case of an REO, the original home owner is no longer in the picture and the property is (or very likely will be) for sale. In a short-sale situation, the owner is still very much in the picture, is looking to “short” the lender on payoff and may have to obtain approval from other parties in addition to the lender before being able to finalize an agreement (mortgage insurance carriers and second lien holders to name a few).
The downside of REO property is that often times the REO property is not in good condition. A number of factors come into play — the lender has no interest in improving the property and the homeowner may have not been able to maintain it. If the property was a rental it may have been trashed by tenants. Typically, these properties are sold “as is”. The positive side of an REO is that a real estate investor or buyer can often purchase the property at a very competitive price in relation to the market.
What are your chances of finding an REO in Albany or Corvallis? Out of the 571 homes listed today (08-17-2009) in the Albany market, a quick check shows that about 18 are corporate/lender owned. In Corvallis, only one of the 415 listed properties were easily identified as corporate/bank owned. Philomath posted one of 74 as lender owned.
Note: statistics are for residential or residential with acreage, condos, manufactured inclusive
For more information on REO property click here.
Equal Housing Opportunity. Each Office Is Independently Owned and Operated.