patrick.net

CL says

Wouldn't locking the previous buyers into their loans be an incentive?

Maybe--I'm not saying it's impossible--but it still seems kind of far fetched to me.

Who's to say that the 1099 penalty won't be revoked again if foreclosures spike. I certainly wouldn't bet against it.

I just don't think: 1. banks cooperate with each other, and 2. are smart enough to pull this off.

tatupu70 says

Who's to say that the 1099 penalty won't be revoked again if foreclosures spike. I certainly wouldn't bet against it.

I can picture a Kabuki theater situation where the Dems blame the GOP for obsessing about deficits and the GOP blames the Dems for spending like drunken sailors. The casualty would be the fence-sitter, but the benefit would be to the banks.

They just want to push the emotional drive to stay put, already likely since the affected owners have been in a zombie-like state for years, but now they will just be stoically resolute. "Ahhh, fuck it. I like the house, the pool and the addition I built".

tatupu70 says

I just don't think: 1. banks cooperate with each other, and 2. are smart enough to pull this off.

They certainly have the incentive this time. Trillions of dollars and economic collapse could create enough collusion and coordination to do it!

Why do you think they are sitting on them? Or do you think they aren't?

“Or is he finally retired on a tropical island with his cash-flow positive Concord properties providing lots of drinks, and island virgins?” Ahh you bitter renters don’t know how close to the truth you are, we duckheads, ARE ROLLING IN IT. Just the other day we swapped Real Estate Tycooning tips over drinks and steaks at SF Penthouse Club! Too expensive for you negative nancys but let me tell you CHACHING BABOOMBOOM.

duckhead says

Heloc bombs, tidal waves of shadow inventory, collapsing economies around the world… YAWN. Listen negative nancys these are reasons why YOU SHOULD BUY A HOUSE. A happy place you can paint any color you like and have super bowl parties, instead of paying attention to reality!!! Listen to BMWMAN, obviously doing well he has a bmw, step right up ladies CHACHING!

That's right, come git it ladies. You know you want to ride in my 21 year old car that I paid $2k for...the sucker can hold ~0.85 G's on the skidpad and rev to 8000 RPM all day long! Sorry honey, you can't turn the AC on. I never put it back after tearing the motor down 5 years ago. Yeah...'tis a real pussy magnet!

CL says

Why do you think they are sitting on them? Or do you think they aren't?

This is (obviously) just my opinion, but I don't think there is any concerted effort to hold back inventory to raise prices.

I think it's possible that banks are foreclosing at some steady rate to manage the effect on their financial statements. And it's also possible that the whole robosigning debacle slowed the process.

But I can't see how banks would orchestrate this to stabilize prices then let inventory get this low without taking advantage of the situation to unload a bunch of their REOs.

Aye Carumba no ac! Bmwman is not doing as well as I thought. :( Okay bro here is what you need to do: buy as many houses as you can ( pay the Realtors â„¢ full commission cause they got your back) then rent them out YOU WILL BECOME RICH. Ignore the doomers here, and dream your way to reality!!!

tatupu70 says

But I can't see how banks would orchestrate this to stabilize prices then let inventory get this low without taking advantage of the situation to unload a bunch of their REOs.

So, if it's not concerted, then you'd think that a large amount of inventory will be coming online soon, bringing down prices?

CL says

tatupu70 says

But I can't see how banks would orchestrate this to stabilize prices then let inventory get this low without taking advantage of the situation to unload a bunch of their REOs.

So, if it's not concerted, then you'd think that a large amount of inventory will be coming online soon, bringing down prices?

No--why would a large amount of inventory come now? Maybe a little more because of the robosigning settlement...

So you think inventory is genuinely low? It seems as though the robosigning issues held up the processing, but now that they have their guidelines they will be able and have been foreclosing on more houses.

What happened to all the houses that became REO? What about the ones that are being processed now that the logjam has been cleared?

They gotsta go somewhere.

CL says

What happened to all the houses that became REO?

That's a good question. What is the actual number of REOs? How many/what percentage are on the MLS? That would be interesting data to have.

CL says

What about the ones that are being processed now that the logjam has been cleared?

There was an increase in foreclosures last month. Maybe it's the beginning of a sustained rise. We'll see.

CL says

They gotsta go somewhere.

That is a fact.

http://www.ritholtz.com/blog/2012/04/corelogics-shadow-inventory/

Like this?

"Note that CoreLogic has a much more restrictive definition of Shadow Inventory than some other folks (including myself) do. They create an estimate of “Pending Supply” by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent, in foreclosure as well as real estate owned (REO) by lenders.

That formula yields them a count of 1.6 million units — or about a 6-month supply at current sales rates"

CL says

That formula yields them a count of 1.6 million units — or about a 6-month supply at current sales rates"

That is an interesting chart. And it does have what I'm really interested in--REO and pending foreclosures separated out. Those are at about 3 months inventory as of January. Sales have increased since January though, so I'd suspect this number has gone down.

I'm somewhat skeptical of the pending serious delinquency numbers. Notice that they went down from Oct. 09 to Oct. 11 without any real increase in REO or pending foreclosure. I would have expected the red to be a predictor of blue--ie, a hump in the red area would be followed about x months later with a hump in the blue. Otherwise, why is the red going down?

Core Logic deals in CRE. Thats a lot of commerical Real Estate. Thats a lot of stuff owned by the big boys to begin with. GE cap is the largest small to mid sized lender in the United States on those. You might as well call them the Nation Association of Appraisers. Re-Max GM home lending, Chase Manhattan. Actually they are based out of Britian when it all comes down to it. You think America has interlocking corporations. You should see how many corporations not all, lock back into British PLC's

robertoaribas says

the robosigning settlement is 4 months old,

Can they really print all they want?

Nationally, the housing bubble is *mostly* deflated. At least according to case-shiller:

http://www.multpl.com/case-shiller-home-price-index-inflation-adjusted/

Another small drop from 128 down to 120 would get us back to the post WW2 average.

Every market is different. Some parts of the Bay Area might be "importing" part of the Chinese RE bubble. A+ or GTFO!

Here's Ritholtz's take, for reals:

http://www.washingtonpost.com/barry-ritholtz-on-investing-house-prices-are-down-mortgage-rates-are-low-but-is-the-real-estate-market-ready-to-rebound/2012/04/05/gIQAnveZzS_story.html

or

http://tinyurl.com/77l2dpf

"These houses will eventually become part of the total supply for sale. Although there is no official count, estimates of potential shadow inventory run as high as 10 million."

That's considerably higher than the Corelogic numbers, eh?

robertoaribas says

1. I'll take odds more of this is in judicial foreclosure states, like Florida and New York, where I've heard of multiple years of shadow inventory. Arizona and California are trustee deed states, and thus the sale is much quicker.

And, we do have the benefit of being in a non-judicial state, but we also have the burden of being in a sand state, so you'd have a much larger number of distressed properties to clear non-judically, n'est-ce pas?

Capitol Controls perhaps:

"•Restrictions on bank withdrawals

•Restrictions on money market fund redemptions

•Greater restrictions on retirement fund liquidations

•Fixing an official exchange rate and criminalizing market rate transactions

•Banning the conversion of domestic currency to foreign currency

•Banning the movement of assets out of the country to foreign financial institutions

•Barriers, restrictions, additional transaction costs imposed on foreigners seeking to deposit funds or make investments in safe havens

•Forcing sovereign debt owners to accept longer maturities rather than principal repayment

•Banning gold ownership

•Reissuing the currency in a new form (an acute risk in Europe obviously)

•Restrictions on the size of cash transactions"

http://theautomaticearth.com/Finance/capital-flight-capital-controls-capital-panic.html

Then again, the timing might make this the catalyst for the third and most brutal leg down.

wthrfrk80 says

Nationally, the housing bubble is *mostly* deflated.

I agree with this. For the most part the bubble is gone, and what we have now are local mini-bubbles (Bay Area, Orange County, parts of NY). These bubbles are deflating a lot more slowly, but still deflating.

However a lot of the downside to housing isn't entirely contained within the housing market itself, it's other "external" factors that could cause this correction to "over" correct like all bubbles eventually do.

First, there is a dearth of inventory. Second, the Fed will cease to do anymore easing after June 30 - QE3 or Twist. This will result in rising interest rates and all the procrastinating buyers on the sidelines will jump in to buy.

Result - a booming housing market!

Sure, the banks are "evil", but they are managed by professionals and they do know how to play it better than the common folks.

jhurio says

This will result in rising interest rates and all the procrastinating buyers on the sidelines will jump in to buy.

Are these buyers going to magically find money to buy unaffordable houses?

Are these buyers going to magically find money to buy unaffordable houses?

No. There are lots of buyers waiting on the sidelines. Decreasing inventory and rising interest rates will be the stimulus ...

Housings Dead Cat Bounce says

Nonsense.
When rates go up, housing prices fall

History tells a different story.

jhurio says

No. There are lots of buyers waiting on the sidelines. Decreasing inventory and rising interest rates will be the stimulus ...

Are there many sideline buyers? If they're waiting on the sidelines because prices are too high, how will "higher" prices push them off the sidelines? Rising interest rates will make the "affordability" factor even more acute.

Goran_K says

If they're waiting on the sidelines because prices are too high, how will "higher" prices push them off the sidelines?

Rising prices will only get the sidelined-sellers to put their houses on the market, and there are a lot more pent-up sellers than pent-up buyers right now.

Exactly. Overpriced homes are about as popular as getting punched in the stomach right now. 2006 isn't coming back.

Goran_K says

Exactly. Overpriced homes are about as popular as getting punched in the stomach right now. 2006 isn't coming back.

From the movie "Dirty Work":

Kirkpatrick (the landlord): "As long as the rent is on time...you don't wreck the place...we ok. If not...*bam*...I punch you in the stomach!"

jhurio says

Sure, the banks are "evil", but they are managed by professionals and they do know how to play it better than the common folks.

Then they shouldn't be crying crocodile tears to get help from Fed. They are manged by crook professionals - pretty much what AF said.

Call it Crazy says

Yep, there are tons of buyers waiting on the sidelines.....

there are sellers out there making up multiple bids without proof to encourage higher prices.. and there are buyers making multiple bids on multiple homes with only intent to buy one .. each party inflating prices...

once you get a less emotional market place, and more prudent buyers .. you will see second leg down..

you know.. where were all these multiple bids and pend up buyers when we had a more rational home market... 1980 to 2000 ?

The catalyst for the next down leg is going to be FHA loans. 1 out of 6 FHA loans is already delinquent, and bailing out FHA is going to be extremely unpopular. FHA is the next sub-prime:

http://www.doctorhousingbubble.com/fha-new-subprime-30x-leverage-fha-insured-loans-bailout/

Call it Crazy says

I've heard these stories about multiple bids and selling over listed price but my question is, how many houses are actually experencing this??? Can anyone actually put numbers on the totals.

We bought about 2 and a half months ago so I'm not really paying attention to the market as much, but back then every house we looked at was getting multiple bids. One had 23. Another had 15. We have friends who are still looking and it sounds like its even worse now. This is in the immediate Bay Area.

dunnross says

bailing out FHA is going to be extremely unpopular.

You're kidding right? Anyone who opposes and FHA bailout will be called a racist.

Darrell In Phoenix says

And imagine the collapse that will occur when the speculation dries up. Just like here in Phoenix.

These aren't speculators buying around here and it we weren't speculating either. Simply ordinary homebuyers. The problem is the lack of supply. That and the economy around here has gotten better, thus there is more optimism, and the rates are really low. We got a 3.5% rate and with our 20% down payment the payments are about the same as we paid in rent. So in other words the delta between renting and buying- at least in the Bay Area- has been bridged. A lot of people realize that and hence the more recent surge in buying.

Will it collapse? Who cares. We didn't buy this as an investment. We bought it to live in. If it falls in value by 50% ( which I seriously doubt) then I could honestly care less. We have retirement and cash savings and the house is again- what we live in.

Call it Crazy says

tatupu70 says

I'm somewhat skeptical of the pending serious delinquency numbers. Notice that they went down from Oct. 09 to Oct. 11 without any real increase in REO or pending foreclosure.

I'm also skeptical of the "delinquent" numbers. How do we really get a true and accurate number? Do the banks truthfully report these loans that are delinquent or non-performing?

My guess, there are a whole lot more that aren't being reported and people are just waiting for the sheriff to show up.

They have to report the account status every month to Experian/Equifax/TransUnion I think. Is that information public? (not names and account #'s, but do the credit bureaus have to make the stats public I wonder?) That is probably the source.

I'd just like to throw it out there that I work in a Loss Mitigation department, and these loan modifications are a joke. Almost every sale I approve (I do short sales) is being sold by someone who already had a modification previously.

Point being, whatever percentage of loans in delinquency that are "working" on a retention option (mod) versus a liquidation option (SS or Deed in Lieu) is quite large. The bulk of those loans will end up as short sales eventually. Half the people trying to get a mod don't qualify. They either run deficits of income in the thousands of dollars every month (hopeless) or they are strategic defaulters who fax us in the same package every month hoping to get another 90 day bump out on their F/C sale date. They know if we have them active in Loss Mitigation, they can press for us to postpone F/C again and again. (and the banks do it because a SS will always bring in more $ (less loss) and that won't change until prices start to rise and stay that way)

Eventually these hopeless souls, or the scammers, are going to find their way to liquidation one way or another, be it REO, Short Sale, or Deed in Lieu. We've long past the point of people who truly need help, and we're just getting dipshits who are experiencing buyer's remorse, or a-holes with $10k a month net income with expenses of $6k, who are incredulous why we won't approve their short sale when they could easily afford 2 more homes and still be able to have money left over each month.

For instance, we have a guy who bought a home in July of 2012. He signed the papers in July. He applied for "assistance" in August after making 0 payments, claiming he wants a better interest rate because other people called in and got their's lowered to 2% (the initial HAMP rate that's only realy in effect the first 5 years, and most people don't qualify for anyway) This douchebag is already unable to pay and hasn't made one payment. Whoever qualified him for this loan should be throttled.

I have another short sale that just fell through because the buyer lost their job right before closing. Seriously people....rent a fucking house. Unless you're sitting on PILES of excess cash (enough to at least get you and your family through 12 months of job searching with no income....and that's AFTER your down payment is paid) then don't sign the contract.

IMO anyone who bought a home post 2010 should be banned from Loss Mitigation. If you didn't read the paper, or turn on the news, for 3 years from 2007-2010 and don't have a handle on this whole homebuying process, and the pitfalls therein, you are too stupid to deserve assistance. Shouldn't there be a statute of limitations on "I didn't think I'd lose my job" or "I didn't think I wouldn't be able to sell it for a profit in 12 months" bullshit??

Now, if your're in FL, NJ, or NY, that's a different story. I have some accounts that are almost 60 months past due. The person bought the home, paid 10 payments, and skipped the next 60....yes, FIVE YEARS paying nothing, and the courts are letting them play us like a fiddle. Can you imagine paying a total of $25,000 to get a home in Queens for 6 full years? Hell of a rent. (and they are nowhere near being evicted...could have some people hitting 7-8 years of squatting EASILY in Jersey or NY before they eventually lose "their" home)

Grazie!

I worked in loss mitigation like shizlor in the teeth of the last crash 95-97. It was VERY DIFFERENT the country still had rule of law.

For example:
1. no mark to myth accounting for banks back then- they HAD TO FORECLOSE/write off debt asap.

2. investors in mortgages actually audited the servicing and there were servicing guidlines about 'why arent you forclosing faster' etc. Fannie/Freddie/VA/FHA were combined less that 50% of loans - and they were not insane criminals then just yet. Average forclosure took like 12 months then 14 was a looong time, any longer you could only get that much time with temporary BK repreive, once we got the BK case # it was full throttle forclosure time. Conventional (non fha/subprime) default rate was 1.2% or so for years....now its double digits permanently!!!!

3. short sale mayhem: there was little of that - you had to list the home in the MLS for a minimum of 30 days - and sumbit at least 3 offers on the home (and not from brother in law!) and they still would mostly deny them if you had other assets, or would make you sign a 50k promissory note if they forgive 100k in pricinipal. Totally opposite from now.

Now the listing agents get a short sale, find a buyer for thier pocket listing, put it in MLS as pending right off the bat and they only submit offers they double dip or who agree to pay 15k short sale negotiation fee outside escrow (this is really common in CA now! - its legal too. )

Basically the whole RE market has been 'federalized'. Expect a permanent mess the rest of your life.

one more thing, the large bank i was at actually pulled out of writing loans in the entire state of lousiana due to you could not always foreclose. The local sheriffs hated yankee banks and would refuse to evict/serve papers etc much of the time thus they could not predict thier losses/profits.

Can you imagine fannie/freddie/fha pulling out of a whole state now like NY/NJ because it takes 6 years to foreclose? no, profits dont matter - only bailouts matter now - its full time bailouts/giveaways/broken system/screw the taxpayer now.

Rising interest rates and low family incomes.

Americans, and I don't know how it is elsewhere, tend to stretch themselves way too thin for a privilege of living in a house. Many buy at the edge of affordability. Because of that, any rise in interest rates would simply shift prices down.

I don't make it a secret, my investments are in wall street and business. But the situation in this country and the mess politicians have created that is hurting everyone around is something that still frustrates me to this day.

As a taxpayer I'm tired of paying for it all, as a citizen I'm frustrated with how badly screwed my country is.

PockyClipsNow says

It was VERY DIFFERENT the country still had rule of law.

IT WAS. Now we have effects of lobbying.
Bailouts were an overnight decision, predicted by banks, thanks to have Goldman Sachs insider as a US Treasure.

Schizlor says

Eventually these hopeless souls, or the scammers, are going to find their way to liquidation one way or another, be it REO, Short Sale, or Deed in Lieu. We've long past the point of people who truly need help, and we're just getting dipshits who are experiencing buyer's remorse, or a-holes with $10k a month net income with expenses of $6k, who are incredulous why we won't approve their short sale when they could easily afford 2 more homes and still be able to have money left over each month.

For instance, we have a guy who bought a home in July of 2012. He signed the papers in July. He applied for "assistance" in August after making 0 payments, claiming he wants a better interest rate because other people called in and got their's lowered to 2% (the initial HAMP rate that's only realy in effect the first 5 years, and most people don't qualify for anyway) This douchebag is already unable to pay and hasn't made one payment. Whoever qualified him for this loan should be throttled.

This country is being ruined by the lowest common denominator. The "barely got out of high school" crowd is being given $500,000 loans to buy houses, and they think things are going to turn out a-okay.

More than any other time in my life, I've thought about moving out of the country. 10 years ago, I would've thought it was crazy to even consider.

Why buy a house? I just don't get it. Because rents are too high? Eh, it's sixes. I'd be stuck in a place i can't sell when i need to that has perpetually increasing property taxes. Even when people "own" their home, they don't intend on spending more than eight years in it. The investment angle is dead. People aren't buying because they think it's a good investment anymore. I'm a prime target. I easily have 25 percent to put down on a decent place, but don't count on it. Good renters with a good rep are still solid gold. Our landlords bend over backwards to keep us happy. The last time we were in the market to find a new rental, I gave an application to the potential landlords, because I didn't want to sign a lease with a quick flipper or desperate multi house owner. They thought I was kidding. I wasn't. I'd pay more for the right area and a stable owner. Unencumbered and free to go.

IF ... if welfare is cut .... if Section 8 is no longer allowed in the SFH rental market .... if EBT removes the cash function .... if there is ever a closed border .... if Obamacare, or some Rupub version of Republicare-Obamacare-lite is forced upon the public ... if a real nasty war starts, with real high numbers American deaths ... if solar flares take out the grid ... if the Mayans date was miscounted by us by a year .... if just the right amount of bad things happen, THEN cali-housing will no longer be the playground for the specuvestors that make up the REmob responsible for funding the REnazi-lobby that keeps the poopoo flowing. As of today, in central cal, there are still "programs" being used to create buyers, resulting in prices being higher than a true market would support. End those progams, and prices keep going down. I think.