Not a whole lot I can add, this article sums it up clearly. Wake up US your house is on fire!!! Click on title above or cut and paste this:
http://www.nydailynews.com/opinions/2010/02/28/2010-02-28_burning_down_the_house.html
Wait until it's not 1 out of every 4 US homes under water but instead it's 1 out of every 2 which is where we will be by the end of 2011!
Sunday, February 28, 2010
Friday, February 26, 2010
Foreclosure Bubble Being Created?
I just read this and thought I would share with you, the most concerning part, and there are many, is that with 90+ day delinquencies and foreclosures in process both doubling in the past year, the number of actual foreclosures completed dropped??? So what is coming???
Moody’s writes:
HAMP, Moratoriums, and Court Delays Expand Foreclosure Bubble: >>>>>
The backlog of seriously delinquent mortgage loan inventories continues to grow as foreclosure referrals and foreclosure sales are stalled by mediation efforts, growing foreclosure court delays, title and assignment difficulties and missing documents necessary to initiate foreclosure. As the accumulating delinquent and modified but re-defaulted loans progress through the default process, foreclosure and liquidation time lines will be exacerbated, resulting in higher holding costs and elevated loss severities.
The 2009 third quarter OCC Mortgage Metrics Report indicates an 80% increase in the number of foreclosures in process and a 125% increase in the number of loans 90 or more days delinquent compared to a year earlier (Figure 1). Over the same period, the number of completed foreclosures decreased by over 7%.
Servicers recently surveyed by us indicate that they are holding off on both foreclosure referrals and foreclosure sales in order to provide delinquent borrowers ample opportunity to be evaluated for a HAMP modification. Since the announcement of the program in March 2009, the foreclosure process has been stalled on over one million delinquent loans, resulting in a significant slowing in the pace of liquidations.
In addition, loans that do wind up in foreclosure are taking much longer to resolve due to court delays. Servicers have indicated that state courts are overwhelmed with foreclosure cases, lengthening foreclosure sale time lines by up to two years or more. Judicial foreclosure states such as Florida, New Jersey and New York have experienced some of the most notable delays.
The slowdown in foreclosure sales has applied brakes to the rapid decline in home prices as the market has not been flooded with distressed sales. However, the foreclosure overhang continues to pose a major risk. A long and slow resolution of stalled foreclosures will significantly increase loss severities.
Treasury’s roll out of the Home Affordable Foreclosure Alternative (HAFA) program should help resolve this to a degree. HAFA requires that servicers consider borrowers for short sales or deed-in-lieu prior to pursuing foreclosure sale.
This commentary is more technical in nature than my earlier post this morning. That said, there is one specific line grabs me:
A long and slow resolution of stalled foreclosures will significantly increase loss severities.
That, my friends, is not good business. As much as government officials may believe their programs and efforts are helping, they are not.
Moody’s writes:
HAMP, Moratoriums, and Court Delays Expand Foreclosure Bubble: >>>>>
The backlog of seriously delinquent mortgage loan inventories continues to grow as foreclosure referrals and foreclosure sales are stalled by mediation efforts, growing foreclosure court delays, title and assignment difficulties and missing documents necessary to initiate foreclosure. As the accumulating delinquent and modified but re-defaulted loans progress through the default process, foreclosure and liquidation time lines will be exacerbated, resulting in higher holding costs and elevated loss severities.
The 2009 third quarter OCC Mortgage Metrics Report indicates an 80% increase in the number of foreclosures in process and a 125% increase in the number of loans 90 or more days delinquent compared to a year earlier (Figure 1). Over the same period, the number of completed foreclosures decreased by over 7%.
Servicers recently surveyed by us indicate that they are holding off on both foreclosure referrals and foreclosure sales in order to provide delinquent borrowers ample opportunity to be evaluated for a HAMP modification. Since the announcement of the program in March 2009, the foreclosure process has been stalled on over one million delinquent loans, resulting in a significant slowing in the pace of liquidations.
In addition, loans that do wind up in foreclosure are taking much longer to resolve due to court delays. Servicers have indicated that state courts are overwhelmed with foreclosure cases, lengthening foreclosure sale time lines by up to two years or more. Judicial foreclosure states such as Florida, New Jersey and New York have experienced some of the most notable delays.
The slowdown in foreclosure sales has applied brakes to the rapid decline in home prices as the market has not been flooded with distressed sales. However, the foreclosure overhang continues to pose a major risk. A long and slow resolution of stalled foreclosures will significantly increase loss severities.
Treasury’s roll out of the Home Affordable Foreclosure Alternative (HAFA) program should help resolve this to a degree. HAFA requires that servicers consider borrowers for short sales or deed-in-lieu prior to pursuing foreclosure sale.
This commentary is more technical in nature than my earlier post this morning. That said, there is one specific line grabs me:
A long and slow resolution of stalled foreclosures will significantly increase loss severities.
That, my friends, is not good business. As much as government officials may believe their programs and efforts are helping, they are not.
January Home Sales Plummet . . . Unexpectedly???
Click on title above to see AP article stating that last month's drop in home sales was unexpected and surprising . . . Really? No one here was surprised. A whole lot more correction ahead! Good news is home prices today are higher than they will be at any point in the next 10+ years as we will continue to see declines while the distressed properties work their way through the system. By late 2015 most of the troubled properties should be under the control of financial institutions which will, finally, end the slide. Once that bottom is reached it will most likely take another several years to dispose of those properties thereby creating an extended flat bottom. So if you are thinking of selling, you would be very wise to do so sooner, rather than later.
http://finance.yahoo.com/news/January-home-sales-fall-72-apf-1993954776.html?x=0&sec=topStories&pos=main&asset=&ccode=
http://finance.yahoo.com/news/January-home-sales-fall-72-apf-1993954776.html?x=0&sec=topStories&pos=main&asset=&ccode=
Thursday, February 25, 2010
Don't look back.
Click on the title above to review a great article by The Huffington Post on how large institutions are walking away from upside down properties and how more and more savvy homeowners are doing the same.
Wednesday, February 24, 2010
Commercial default rates more than double, worst not expecting until at least 2011.
Click on the title above to review a Business Insider article and think about the Commercial Real Estate Default Rate.
New home sales drop to record low. Duh!
Click on the title above or the link below to review a Reuters article on New Home Sales.
Ouch! has been saying for years that all but the most custom of custom homes will stop being built and that from a purely financial perspective land currently has a negative value in many parts of the country.
Look at the math: If I gave you a piece of land for free and all you have to do is pay to build a new home, labor, materials, permits, carrying costs, etc., and let's say that will cost you $200k. In most markets you will be competing against very similar homes (foreclosures, short sales, etc.) which are currently sitting on the market and not selling for $200k OR EVEN LESS. So what is the value of the land???
If you have liability and taxes simply by owning it, and you will incur a loss by building on it and then selling it...how does it not have a negative value? Ouch! has told us for several years that we simply have too many dwelling units in most of the country. If we needed more would new home sales be hitting record lows???
http://finance.yahoo.com/news/New-home-sales-drop-to-record-rb-2868445540.html?x=0&sec=topStories&pos=main&asset=&ccode=
Ouch! has been saying for years that all but the most custom of custom homes will stop being built and that from a purely financial perspective land currently has a negative value in many parts of the country.
Look at the math: If I gave you a piece of land for free and all you have to do is pay to build a new home, labor, materials, permits, carrying costs, etc., and let's say that will cost you $200k. In most markets you will be competing against very similar homes (foreclosures, short sales, etc.) which are currently sitting on the market and not selling for $200k OR EVEN LESS. So what is the value of the land???
If you have liability and taxes simply by owning it, and you will incur a loss by building on it and then selling it...how does it not have a negative value? Ouch! has told us for several years that we simply have too many dwelling units in most of the country. If we needed more would new home sales be hitting record lows???
http://finance.yahoo.com/news/New-home-sales-drop-to-record-rb-2868445540.html?x=0&sec=topStories&pos=main&asset=&ccode=
Home purchase loan demand lowest since 1997.
Click on the title above or the link below to review a Reuters article and learn about the Home Purchase Loan Demand.
What has Ouch! taught us for years about the relationship between housing demand and prices 6 to 12 plus months later???
http://finance.yahoo.com/news/Home-purchase-loan-demand-at-rb-1475575272.html?x=0&sec=topStories&pos=7&asset=&ccode=
What has Ouch! taught us for years about the relationship between housing demand and prices 6 to 12 plus months later???
http://finance.yahoo.com/news/Home-purchase-loan-demand-at-rb-1475575272.html?x=0&sec=topStories&pos=7&asset=&ccode=
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