Sacramento Real Estate Views

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Foreclosure Auction Postponement

A Tale Of Two Sellers

This week I was showing a home in Lincoln Crossing to one of my active buyers and came across a great  home on Sheffield that backed up to a green belt.

Well maintained, great amenities, reasonably priced for the area..seemed to have everything.

The buyer had back out and the property was scheduled for auction in Auburn last Monday.

My client was very interested in the home so I contacted the agent to find out the status of the auction.

Would they postpone the auction with an offer in hand?

In my experience, getting an auction date postponed at the last minute like that is very difficult especially when they are trying on Friday to get a postponement by Monday morning at 10am.  I didn’t think they could pull that off.

They got an offer mid day on Friday, not ours, and turned it into the lender.  I checked Reliable Posting & Publishing and they had it on the list Saturday that the auction was still scheduled for Monday.

Postponed?  Really?

Come Monday morning, I checked the site again and the property was not on the list for auction that morning.  The lender was Wells Fargo and they got a postponement at the last minute.  That’s great for the sellers.  It doesn’t always go that way.

I have a client that turned in an offer to their lender a week in advance and their lender, Chase, said that postponing the auction was impossible without 10 days notice.  The property went to auction as scheduled and was sold to the highest bidder.

So one bank gets is done in less than 24 hours and another can’t do it without 10 business days notice.  What’s the difference?

Investors

While you may be paying your mortgage to Wells Fargo, Chase or B of A, they are not, in all likelihood, the investor who owns your mortgage but just the servicer.  The investor is an entity such as Freddie Mac or Fannie Mae.  All short sales or foreclosures have to go through the investor prior to approval.

The servicer handles the preliminary negotiating, gets all the paperwork together from the seller then presents it to the investor who then makes a decision either way.

By far, Wells Fargo has been the easiest to work with in getting short sales approved and closed.  The others are just delaying the process to lengthen the time so they can mask their losses to their investors and the government is playing along presenting failed program after failed program to fake the public into believing that they are actually doing something.

The reality is that the government could have devised a program that actually worked to help homeowners that would have cost everyone less but instead gave the money to big business who are now making billions while the people who put them in office and drive the economy still struggle and will struggle with this mess for years to come.

And they did it with our money.  Crazy.  Who thought up this system?

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Tags: placer county foreclosure auction

Foreclosure Truth

Sean O’Toole Hits The Nail on The Head

I was just directed to an article by my good friend John Levy in Anchorage written by Sean O’Toole of ForeclosureRadar.com.

ForeclosureRadar.com is a very informative site and toward the end stages of the massive REO inventories, I subscribed to it for advance notice of what might be coming on the market.

Sean has written an article that I’ll re-post here and I believe, and have made reference to in the past year, is a likely scenario that explains the differences in the level of the notices of default vs. the trustee’s sales going on in the Sacramento real estate market.

This is an outstanding article.  Read on and enjoy.

From Sean O’Toole of ForeclosureRadar.com dated 8/12/10:

“I spoke last week at a real estate investment club and shared with the audience my belief that foreclosures will trickle out over a very long time rather than come as a wave of foreclosures as others continue to inaccurately predict.

I do however, understand the nature of those predictions. Given the number of households that aren’t paying their mortgage (delinquencies) we should be seeing a massive wave of foreclosure notices, and ultimately foreclosure sales.

It’s a logical conclusion. But this has become a political problem in a world of financial fantasy, so I don’t believe that simple logic applies.

The reality is that through financial engineering (interest only, subprime, swaps, option ARMs, negative equity, stated income, etc.,) we created trillions in excess mortgage debt that has left millions of homeowners underwater, financial institutions on the brink of collapse, and the FDIC nearly insolvent.

Back in September 2008 it became clear that financial collapse was imminent, and the federal government did what it does best – bailed out those who caused the crisis while leaving taxpayers holding the bag for the losses. Pulling this hat trick off required one simple ruse – getting everyone to believe that those losses ultimately wouldn’t be very big.

To do this the government changed the rules. The FDIC who previously forced banks to get bad assets off their books became a leading proponent of saving homeowners with loan modifications that likely just delay the inevitable.

With a little government pressure, the supposedly independent Federal Accounting Standards Board was pressured into letting banks account for loans at theoretical values based on computer models rather than current market value.

Next they began rolling out an acronym soup of programs, which they promoted as being help for America’s homeowners – HAMP, HAFA, HARP, 2MP and more. But the reality is that to date these programs have resulted in little more than delays. The government and lenders say that these failures are due to complexities of implementation, difficulty reaching homeowners and a sundry other things.

But what if these programs were never intended to succeed? What if they were simply intended to create delays, provide false hope, and maybe get the banks a bit more cash out of homeowners in the form of trial loan modification payments?

Sounds like a crazy conspiracy theory, I know, but hear me out.

The problem faced by both lenders and the government is that they can neither afford to kick homeowners out, or bail them out. For lenders, either scenario forces losses to be recognized, while thanks to mark-to-model accounting rules, and little or no pressure to foreclose from the FDIC, they can instead leave non-paying homeowner in place and push those losses into the future.

Many believe that most major corporations manage earnings, what could be more perfect than getting to choose when, and if, they recognize mortgage related losses. For the U.S. government either scenario is political death. Politicians have no appetite for allowing banks to put families on the street en masse through foreclosure, nor forcing banks to deal with the problem through bankruptcy cram-downs or other means.

At the same time they realize their constituents who do pay their mortgage (or rent) simply won’t stand for a taxpayer funded bailout of their upside down neighbor. Instead, it seems they believe bailouts should be saved for the truly deserving like the executives and corporate shareholders of banks, AIG, GM, etc.

If we aren’t willing to either kick non-paying homeowners out of their homes, or bail them out, what other option is there? The answer is clear. It’s the same thing we’ve done with national deficits for years. Trade tomorrow for today, with a policy of extend and pretend. I have no doubt this is the present policy, and that this will be the policy for years to come as we work through wiping out the trillions in excess negative equity that was created during the bubble.

A member of the audience during my talk asked if this policy was really possible, after all we can’t just let non-paying homeowners stay in their homes forever. If paying homeowners figured that out, everyone would stop paying, and then our financial system would crumble.

I agree, and it’s clear the banks realize this too. But it is a problem that is easily solved by the diabolical game of Russian roulette. So long as lenders continue to foreclose on at least a handful of homeowners each month, in what from all appearances is a completely random game of chance, they’ll keep those willing and able to pay their mortgage doing so.

Those who decide not to pay their mortgage will find themselves playing today’s update on the Russian game, Foreclosure Roulette, wondering each month whether they’ll get another free month in their prison of debt, or finally be shot and forced to move.”

Crazy, Sean?  I don’t think so…I think you hit the nail, most directly, right on the head.

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Tags: foreclosure statistics sacramento, Rocklin, Roseville

Foreclosure Cancellations Continue To Rise

Short Sales, Loan Modifications Reducing Foreclosures

A report today from ForeclosureRadar.com confirms that banks are favoring short sales over foreclosure.  Foreclosure cancellations are at all time highs and the result is fewer foreclosed homes coming on the market and an increase in short sales available for sale.

While short sales and loan modifications aren’t the only reason for the reduction in the foreclosure inventory of homes for sale, this is a clear indication that the governments efforts to stem the tide of foreclosures is working.

Foreclosure Time Frames Also Rise

The time it takes the banks to foreclose is also a sign of short sales and loan modifications are being favored over foreclosure.

The time it takes to foreclose on a home in default has increased from 163 days in November of 2008 to 239 days in April of 2010.  That is a 46% increase in a year and a half time frame.

Lenders and servicers are giving homeowners more time to get either a short sale or loan modification done.

The fact is, foreclosing costs more money than keeping a homeowner in the home or allowing them to sell it short.  Selling short is just a better financial decision for everyone involved.

1)  It costs the investor who holds the mortgage less.

2)  It costs the homeowner nothing to sell short.

3)  Homes don’t sit in neighborhoods vacant for vandals to abuse. An occupied home isn’t a target.

4)  Homes in better condition sell for more money.  Short sales are better taken care of than bank owned homes.  This helps to maintain values in neighborhoods.

5)  Time frames have shortened and the lenders/servicers are making it easier to get a short sale closed.

The acceptance of short sales is the pathway back to a normal market in the Sacramento region.  While this housing crisis is not even close to being over we can see the light at the end of the tunnel from here.

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Tags: short sales rocklin roseville sacramento

Foreclosure Report – July 2009 – Sacramento County 11th in Foreclosures Statewide

Foreclosure Statistics Mixed

ForeclosureRadar.com, the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for July 2009.

This report is very comprehensive with great information looking into the housing downturn here in California. ( If you’d like a copy with more details, contact me.  I’ll email it to you.)

I was surfing my ForeclosureRadar.com account yesterday and I was amazed how up to date the information is.  I found a property that was listed in the MLS as a short sale that had been sold at auction that day and was recorded as such on the site.

That should not be a surprise for the listing agent. That said, it most likely will be as it was still listed.  Crazy!

Report Highlights

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Tags: sacramento foreclosure statistics

Sacramento Foreclosures

The Next Wave

With the “shadow inventory” still out there, lurking, there is a new threat to housing in the Sacramento region as values have declined to pre-2000 levels.  In some areas, even lower.

CNN Money came out with a special report that cited evidence that by 2011 when they see the housing market stabilizing that roughly 25 million borrowers nationwide will be underwater on their mortgages.

That number represents nearly half of all homeowners in the United States.

Half of all homeowners will be “underwater” by 2011!

Housing for the middle class for years has been a source of wealth.  The prevailing thought was that the first step to wealth was owning your own home.  That isn’t the case now.

What this realization is creating nationwide is “strategic default” or in simpler terms, people are walking away from there homes feeling as if it’s impossible for the value to come back to provide them with any possibility of financial recovery.

The article says that 26% of all defaults currently are “strategic” defaults.  And the hardest hit areas?  It’s not hard to find them.  All we have to do is look to our not so distant south.

Modesto and Stockton lead the list here locally and I’m betting Sacramento isn’t that far behind them.

The Question of the Moment

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Tags: sacramento foreclosures

Sacramento County Foreclosure Report – June 2009

1.5 Million Foreclosures So Far

I know it’s stating the absolute obvious but 2009 has not been a good year for homeowners.  The statistics on foreclosures is staggering.  1 in every 84 homes nationwide is in some stage of the foreclosure process.  Since April in our region, properties in some stage of foreclosure increased over 23%, 14% over the previous 6 months and 15% over the same time period last year according to RealtyTrac.com.

My mind has difficulty comprehending this.  This seems like an absolute collapse of the housing system in our country.

1 In Every 84 Homes!

In California, it’s especially bad.  1 in every 34 homes received a filing and our state had the fourth highest number of foreclosures nationwide.

With our current unemployment rate at 11.1% projecting to 13% by next year and state layoffs looking like they will increase, our region is in for a rough ride over the next couple of years.

Upside down?

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Tags: sacramento foreclosures statistics

Foreclosure Activity Decreases 4%

California Foreclosure Rate Decreases

While the foreclosure rate has dropped in the state as a whole, the foreclosure numbers are still up 23% over May 2008 and California is second only to Nevada in foreclosure filings nationwide.  Bright spot?  If you want to call it that.

There isn’t a day that goes by where I don’t pinch myself and ask “is this really happening?”  There is absolutely no way I would have ever thought it would get this bad on one hand and this good on another.

With every bad there must be a good, right?  You’ve got to look hard but it’s out there.  For me, even though it’s my business, it’s tough to see.

Values Are Outstanding

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Tags: foreclosures sacramento