Monday, January 11, 2010

Cresting Wave or Holiday Respite

Back in November, I suggested that the wave of NODs in the two zip codes I track may be cresting. A month and a half later, it sure does appear that way. However, I'm starting wonder if there could be something else is afoot.

Around this time last year we saw a significant drop off in fillings due to state legislation, coupled with a holiday reprieve by some of the government agencies (not sure if it only applied to foreclosure or if it applied to NOD filings as well). So I'm starting to wonder if the wave is actually cresting, or if it's just a temporary lull to avoid the potential bad PR of throwing a family into the streets during the holidays. It's hard to know for sure. I'm curious to hear other's thoughts.

In any case, I do think the number of foreclosures will slowly creep back up, as the NODs run their course. To be honest, I expected to see a lot more foreclosures by now. Fewer NODs are resulting in foreclosures (at least according to the data I track). Perhaps banks are more willing to negotiate short sales, perhaps there is shadow inventory, who knows.


Paul said...

I'm seeing a similar reported decline in NODs in Cameron Park from a peak last fall. IMO, some is seasonal and some is political. IMO, I think the "peak" of NODs is behind us, but I also don't think we are going to see a "big" improvement for a considerable time. I think there is still a lot of NODs coming down the road because of (a) California's abysmal employment situations; (b) the shear number of owners who are underwater or over-encumbered; and (c) the number of loans currently in default, but NODs not net recorded.

husmanen said...

I have noticed a larger number of 'cancelled' foreclosure auctions as well. Could be HAMP funds, short sales or ? But it is happening, e.g. my rental missed the bullet, although it may be temporary.

The crest may be occurring in NODs being filed. Not sure about those that are 90days late but not NOD filed. I think it is hard to find this data but it could indicate if there are workouts being done due to 'strategic walkaways', banks turning a blind eye etc. These would never show up in a NOD.

Another question then is, if the crest is occurring and bank owned homes and preforeclosure (short-sales) are the vast majority of the market what will happen next?

Many 'organic' sellers don't want to sell because of the perception of lower prices compared to the bubble and then less supply may be coming on the market from NODs.

If this is the norm for the short term it looks like someone has to blink, buyers (accept prices not supported by wages/income or rental parity) or sellers (accept bubble prices won't be back).

sacramentia said...

I've heard of several successful loan modifications lately, maybe they are widespread enough to be having an impact.

Or maybe the economy is actually starting to recover, or people feel like hanging on if thier stock portfolio is looking better. I really don't know.

PeonInChief said...

From the tenantsforeclosure blog, it appears that a lot of lenders are foreclosing on buildings where the NOD was filed six, eight, ten months ago.

Buying Time said...

According to the latest stats out form Foreclosure Radar, activity is way down. You can get the latest report on their blog:

husmanen said...

BT, thanks for the link. Didn't have that one.

The December 2009 report shows an annual decrease in NODs by 22% and 41% for El Dorado Co and Sac Co respectively. From Nov09 to Dec09 the decrease was 5% and 18% El Dorado Co and Sac Co respectively.

The annual change in NOTs were a little different as El Dorado Co's increased 58% and Sac Co decreased 5%. The monthly change for El Dorado Co decreased 5% and Sac Co increased 8%.

NODs are decreasing across the board and NOTs are a little mixed.

NODs could be the work-outs we have discussed or that the banks are turning a blind eye to failed payments and not filing. Instead of strategic default it is "strategic asset valuation" from the banks side.