Here Comes The (foreclosure) Rain Again....Falling On Our Heads

By
Real Estate Appraiser with PahRoo Appraisal & Consultancy
http://actvra.in/kwd

Depending on what news you follow and what topics interest you, CNBC announced that Bank of America is increasing its foreclosure activity.  The release indicated that Bank of America is delivering more notices of default to borrowers in August, well over 200 percent more than in previous months. (A notice of default is the first stage of the foreclosure process in non-judicial foreclosure states, that is, where foreclosures do not go before a judge. The notice of default is usually sent when a borrower is 90 days or more overdue in payments, but that timeline has been extended significantly during this housing crisis, due to the so-called "robo-signing" processing scandal and the sheer volume of troubled loans, as noted in the CNBC article.)

Many things have contributed to this change in policy by Bank of America, but nonetheless, given this shift, the near-term future holds the likely prospect of further downward pressure on housing prices in already challenged markets as new foreclosures come raining down.  As those new foreclosures come raining on markets already saturated with distressed properties (short sales, foreclosures, bank-owned houses) and little to no change in the demand side of the equation...aka, there is no corresponding increase in buyers, the impact is on price.  So, while this is BAD news in the short term, it is exactly the medicine a doctor would order to cure a disease.  Namely, pass the proverbial kidney stone so you can get back to some sort of normal life.

What does that mean?  Well, it definitely means no recovery in 2012 and possibly (and maybe even likely) continued price erosion for the next couple years, which further translates into more homeowners being underwater.  The cycle goes on...much like the voluminous flooding we've seen ravage parts of our country this past summer.

The foreclosure rain is coming, might be time to take cover.

Michael Hobbs, PahRoo Appraisal & Consultancy

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Lenn Harley 10/01/2011 09:10 AM
  2. Dagny Eason 10/01/2011 10:19 PM
  3. Beverly Femia 10/02/2011 10:37 AM
  4. Kay Van Kampen 10/02/2011 01:50 PM
Topic:
ActiveRain Community
Location:
Illinois
Groups:
Foreclosure Talk
Investors
Realtors®
REO
Short Sale Specialists & Pre-Foreclosure Education
Tags:
bank of america foreclosure
foreclosure rain

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Rainmaker
808,502
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

The really sad thing is that BOA could have done many more loan modifications and reduced the foreclosure inventory.  It benefited them them to do foreclosures instead of loan modifications.  The foreclosures now are not on subprime or interest only mortgages.  They are primarily on homeowners who lost their jobs and may have found work again, but couldn't get a loan modification.

Oct 02, 2011 01:35 PM #67
Rainmaker
683,908
Kay Van Kampen
RE/MAX Broker, RE/MAX Solutions - Springfield, MO
Realtor®, Springfield Mo Real Estate

Michael, good sign that agents should be gearing up to help save the homeowners from foreclosure that want to save their credit.

Oct 02, 2011 01:53 PM #68
Rainer
34,105
Jacqueline Drake CRS
Jacqueline Drake Realty - Saint David, AZ
Southeast Arizona land, farms & horse properties

I find # 53 Bob Millers comment about deficiencies interesting since most states do not have anti deficiency laws to protect sellers in the event of a foreclosure. Arizona has an anti deficiency statute but some properties are excluded. Home on over 2 1/2 acres are in that group. I just had a representative of a lender tell me that they would consider a short sale but it was unlikely that the seller would accept a short sale when they saw they would liable for the loss incurred. This is a home on 36 acres and not protected in the event of foreclosure or short sale. They have problems with a short sale or a foreclosure. Most states don't have any anti deficiency statutes so we will probably start seeing more collection efforts by the lenders.

Jacqueline Drake CRS

Cochise County AZ

Oct 02, 2011 02:15 PM #69
Rainmaker
813,997
Lyn Sims
RE/MAX Suburban - Schaumburg IL Real Estate - Northwest Suburbs of Chicago - Schaumburg, IL
Schaumburg Homes

Hey guy, your in my area & I personally don't see it that way. BofA finally got re-setup after the robo signing fiasco & is actually still waiting to see if it will be sued. They are also going to lay off employees which of course will be in these departments.  I really don't see a huge influx of anything coming down the pike for the Northwest Suburbs.

Oct 02, 2011 04:04 PM #70
Rainmaker
162,824
Elisa Uribe Realtor #01427070
Wells and Bennett Realtors - Oakland, CA
California Homes for Sale in the East Bay

I have definitely seen BofA more cooperative in pushing short sales through which is a plus. It would be great to get rid of all the foreclosures and get back to a more traditional market!

Oct 02, 2011 06:38 PM #71
Rainer
15,757
Lina Sarkissians
JohnHart Real Estate - Glendale, CA
CDPE, Short Sale and Foreclosure Resource, SRES

I have one question.  With all these defaults and REOs, why aren't we busier as professional, licensed Real Estate Agents?  The big banks need to hire agents, train them and put them to work.  It's all commission based, so they get what they want and we get work!

Oct 02, 2011 06:48 PM #72
Rainer
124,785
Laurie Clark CRB Angel Realty LLC Your Monument Realtor 719-502-6572
CRB-CCSS-ASD-HBS-RSD-Denver Short Sale Agents - Monument, CO
Angel Realty, LLC

Well, this just proves that B of A is not doing a very efficient job of helping home owners. Foreclosures do not help any market and this move by B of A demonstrates why they have such a negative image right now. Short sales are better long term for both the seller, the market, the buyer and the bank.

Oct 02, 2011 06:50 PM #73
Anonymous
Anonymous
Rita Steinfeld Regev

Wonderful reading all these insightful comments. I agree with the FL Realtors. We are in recovery mode. Many luxury condos are getting close to asking price, and foreclosures have significantly diminished.

 

How do you perceive the future of the South Florida market? Dade, Broward and Palm Beach counties? Many thanks.

Oct 02, 2011 08:31 PM #74
Rainmaker
180,681
Michael Hobbs
PahRoo Appraisal & Consultancy - Chicago, IL
SRA, LEED GA, RAA

Gloria, yes indeed.

Judi, I completely agree....markets do not move in harmony....the country is made up of many local markets.

Joseph, well, the rumors were true.

Gail...the healing is much needed, but not likely arriving soon.

Gail, yes loan modifications would make a HUGE difference...but they choose for foreclosures.  Definitely not good for our country.

Kay - I completely agree.  One man's misery is another man's money moment.

Jacqueline, in our market (Chicago-land area) it is part of the protocol that seller's negotiate to remove the deficiency judgement in a short sale.

Hello neighbor!  Lyn...if you have some time this week...give me a call I will share some non-public information that may change your outlook (or maybe not).  Feel free also to look into the data from cherry picker investments (they cover the 7 northeast counties of Illinois)

 

 

 

Oct 02, 2011 10:30 PM #75
Rainmaker
180,681
Michael Hobbs
PahRoo Appraisal & Consultancy - Chicago, IL
SRA, LEED GA, RAA

Elisa...yes, indeed more short sales by BofA is much better than foreclosures.

Lina, they are not busy at the moment but 2012 could be a watershed year for Realtors.

Hopefully in your local market of Angel Realty, there is more attention on short sales than foreclosures!

Rita, indeed south Florida is definitely on a different trajectory...much akin to the strength of Washington DC.  From the conversations I have with a couple people regarding south FL, the market appears to have bottomed out and continues on recovery as evidenced by pricing power.

Oct 02, 2011 10:35 PM #76
Rainmaker
134,415
Paul Francis
Prudential Americana Group - REALTORS - Las Vegas, NV
Las Vegas Real Estate - Summerlin Homes - 702.592.

Hmmm... we had a 45% increase in NOD's for August compared to July... Not sure if it was just Bank of America that has stepped it up but something that should be brought up is how bogged up filings are all over the U.S.

From what I understand... it takes over 2 1/2 years in New York to foreclose on a home... I heard over 18 months to foreclose on a property in Chicagoland because of how backed up everything is.

How many homeowners do you know that have not made a mortgage payment in over 2 years? I certainly know more then a couple... Ironically... I can think of two that are Bank of America loans.

Personally... I think Bank of America has really stepped up their short sale game and have gotten FAR better then many other servicers.

Regardless.... There will be no recovery until all of the overpriced loans are flushed out of the system...all of the "programs" did nothing but delay the inevitable so here we all still are...

 

Oct 03, 2011 01:59 AM #77
Rainmaker
573,698
Phil Leng
Keller Williams Eastside Market Center - Kirkland, WA
Phil Leng Team - Residential Real Estate Experts &

Hi Michael,

Get it over with.

The last REO conference I attended stated 2015 as the turn around year.

Phil

Oct 03, 2011 05:38 AM #78
Rainmaker
277,998
Kasey & John Boles - Jon Gosche Real Estate
Jon Gosche Real Estate, Boise ID - Boise, ID
Boise, Meridian, Ada/Canyon/Gem/Boise Counties

I'm sorry, I really tried to read your post and pay attention to it but I kept getting distracted by that ADORABLE kid in your profile pic! -Kasey

Oct 04, 2011 02:57 AM #79
Rainmaker
180,681
Michael Hobbs
PahRoo Appraisal & Consultancy - Chicago, IL
SRA, LEED GA, RAA

Paul, I agree...BofA has shown a willingness to deal with their issues...which ultimately should be a very good step towards 'passing the stone' which has caused so much pain.

Phil..I'm with you on this one.  the sooner this passes, the sooner bright skies for typical homeowners can return.  In the meantime, those clients of ours which focus on distressed real estate are thrilled.

John and Kasey...Thank you!

Oct 05, 2011 04:13 PM #80
Rainmaker
268,409
Paddy Deighan JD PhD
Aston McLaren Inc - Vail, CO
Paddy Deighan J.D. Ph.D

the bad news is not limited to BofA. Several of the otehr major lenders have begun filing foreclosures after several states (such as NJ) lifted the moratoria on filings....there will be a rash of filings in the near future

Oct 13, 2011 12:10 AM #81
Rainer
28,445
Jayson Holland
RE/MAX - Denver, CO
Jay Holland

Mike Cooper, (comment #2)  WTF? I say again...... WTF!?!?!?

......"a real estate insider" told you 7 million REOs are going to be put on the market in 2012? and that "doesnt include the new 2012 foreclosures"

WHAT!!!!???????

And then all you have to say is "Oy". Thats it? "Oy"?

If that statement were POSSIBLY true, (which it isnt) do you have any idea what that would do to our housing market?

How many properties do you think are on the market now in the entire USA?

According to RealtyTrac there are about 3.5million TOTAL homes for sale in the entire U.S. as of Oct 1st 2011.

According to NAR, we are on track to close about 5m homes this year.

The current "shadow inventory" which (depending on how you define it) is the number of bank owned homes that are not yet on the market is projected at 1.6m-1.8m properties, and the number of properties in the USA currently in some stage of the foreclosure process is 2.2m homes. Another 2.5m borrowers are 30-60 days behind.

The total number of actual foreclosures in 2010 was approx 1 million homes, so where are your 7 million REO properties going to come from?

I'm not picking on you personally, but if you are going to put something out there where hundreds (or thousands) of people can read it, you better be able to back it up. Or was it just a typo?

 

PS> Since I asked you for your sources, here are mine:

http://www.usatoday.com/money/economy/housing/story/2011-10-01/housing-shadow-inventory-foreclosed-repossessed/50618678/1

http://www.realtor.org/press_room/news_releases/2011/09/ehs_aug

http://www.realtytrac.com/trendcenter/

http://www.realestateabc.com/outlook.htm

 

 

 

Oct 18, 2011 05:40 PM #82
Anonymous
Anonymous
Las Vegas Foreclosures

I've heard so much about these robo-signing controversy, It's been a disgrace for the banks engage with this kind of scandal for the housing crisis. We sholud at least help the families in need, modifications of loans may be considered by the bank to atleast lessen famiklies in the streets..

Nov 24, 2011 01:13 PM #83
Rainmaker
180,681
Michael Hobbs
PahRoo Appraisal & Consultancy - Chicago, IL
SRA, LEED GA, RAA

Thank you Paddy.

Indeed, transparency would go a long way towards resolving the mysteries of foreclosure data.

Nov 24, 2011 04:34 PM #84
Rainmaker
128,626
Matt Robinson
Professional Investors Guild - Pensacola, FL
www.professionalinvestorsguild.com

I hadn't seen a big increase in foreclosure activity in our area until the big settlement between the attorneys general and the banks, and since then it seems to have picked up big time.  And clients are now responding to our direct mail like never before...9 new short sale leads just last week alone.

Mar 10, 2012 09:08 AM #85
Rainmaker
180,681
Michael Hobbs
PahRoo Appraisal & Consultancy - Chicago, IL
SRA, LEED GA, RAA

Matt,

that is definitely the experience many others have had as well.

Mar 10, 2012 07:16 PM #86
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Rainmaker
180,681

Michael Hobbs

SRA, LEED GA, RAA
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