Atrios this morning says that "The forgotten foreclosure crisis [ ] keeps getting worse."
Ummm, no. Yes, foreclosures do constitute a huge problem, and yes I agree that cramdown legislation would be a boon to the economy, but to the contrary, it seems we can stick a fork in the notion that there was going to be a massive second round of foreclosures due to 2005 vintage mortgage re-amortizations coming due:
RealtyTrac reported that on a YoY basis:
filings declined ... nearly 10% [ ] in July. There were 325,229 properties that received a foreclosure filing in July, a 4% increase from May. It also marks the 17th consecutive month that foreclosure activity exceeded 300,000, said James Saccacio, CEO of RealtyTrac.Here is the updated chart of year over year changes in foreclsoure activity for the last 16 months:
Saccacio added that default notices were down from the previous year for the sixth straight month in July as servicers and lenders have escalated repossessions (REOs) to near-record levels.
In July 97,123 properties received a default notice, a 28% decrease from July 2009 but a 1% increase from the previous month. Default notices are down 32% from the 142,064 peak in April 2009.
| Month | YoY % change | actual foreclosures |
|---|---|---|
| 04/2009 | +32 | 342,038 |
| 05/2009 | +18 | 321,480 |
| 06/2009 | +33 | 336,173 |
| 07/2009 | +32 | 360,149 |
| 08/2009 | +18 | 358,471 |
| 09/2009 | +29 | 343,638 |
| 10/2009 | +19 | 332,292 |
| 11/2009 | +22 | 306,627 |
| 12/2009 | +15 | 349,519 |
| 01/2010 | +15 | 315,716 |
| 02/2010 | +6 | 308,524 |
| 03/2010 | +8 | 367,056 |
| 04/2010 | -2 | 333,837 |
| 05/2010 | +1 | 322,920 |
| 06/2010 | -7 | 313,841 |
| 07/2010 | -10 | 325,229 |
The trend in those numbers is definitely not "getting worse."
Next month (August) marks the peak of when mortgage re-amortizations come due. If the fabled "tsunami" doesn't appear then, we can safely call it a blown prediction, although there may yet be an echo-foreclosure increase due to renewed house prices declines in the next couple of years. Probably this is what RealtyTrac's spokesman, Rick Sharga, is refering to when he states his belief that foreclosure activity probably won't peak until next year.
4 comments:
Anecdotally, I think the number of trouble mortgages is underestimated by the number of foreclosures. I walked away from a house in January. In June, I received notice that the load will go into foreclosure sometime in the next 120 months. yes, sometime in next 120 months. I suspiciously suspect that mortgage companies are holding back and waiting for new foreclosure legislation that is more favorable to them, say in 2010.
So, is this another put opportunity?
Nothing on the rise in jobless claims? Economists expected -14,000 but got +2,000 so they were 16,000 off.
The 4 week average is 14,500.
One thing to be careful about with the year over year comparison to 2009 is that several of the big players "volunteered" to have their own moratoriums on foreclosures while HAMP was getting off the ground. This was Citi, BOA, etc.
These were loans they held on their books as opposed to loans they were servicing for MBS entities.
Those moratoriums, I believe, ended largely by the end of June 2009.
Some of the state moratoriums were expiring toward the end of the year as well, though there was a moratorium on HAMP participants - in process, etc. - for the holidays. Some of the banks also did this. So, I don't know what to make of the December 2009 jump.
We know that Treasury was upping the pressure on the bank participants in HAMP to get more trials completed not only during the November/December period but into the early part of 2010. I am pretty certain they sent out revised guidelines as part of that pressure.
The bottom line is this foreclosure data has all kinds of "noise" with respect to moratoriums, and government actions with HAMP etc so I don't know how well an apples to apples comparison can be made with any degree of confidence to say whether the situation is better or worse.
Given what the data has looked like, consistently over 300K for 17 months, it seems as if this number is either restricted by the flow that the courts (or whatever) can handle or it is reflective of the servicers having streamlined or defined a manageable workset whether that be for mitigating costs or balancing losses (or gains) across the reporting quarters in managing their loss reserves, etc.
Seems relatively consistent despite the noise. I think that this year will come in above last years 2.8 million completed foreclosures. Remember we are seeing filings here not completed foreclosures. The moratoriums are gone and any inefficiencies in their processes have likely been worked out. Precisely because of the end of 2009 moratoriums we probably have a decent number of completions that were pushed to 2010.
I can't really say if it is "worse" that is a debate for other people. But it is definitely moving sideways (relatively) at an undesirable number. The growing REO inventories and that effect on prices is probably going to make the overall economic picture worse considering the anemic sales despite the very low rates.
But that is just my opinion.
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