Thread: Mortgage Default Notices Surge 33% Nationwide, 55% in Cal

Thursday, September 15, 2011 1:01 AM

Mortgage Default Notices Surge 33% Nationwide, 55% in California, 200% by Bank of America; Corresponding Jump in Foreclosures Will Follow

At long last, the robo-signing scandal may have finally played out. As evidence, please note the August Surge in Mortgage Default Warnings. http://finance.yahoo.com/news/Mortgage- ... 1.html?x=0

The number of U.S. homes that received an initial default notice -- the first step in the foreclosure process -- jumped 33 percent in August from July, foreclosure listing firm RealtyTrac Inc. said Thursday.

The increase represents a nine-month high and the biggest monthly gain in four years. The spike signals banks are starting to take swifter action against homeowners, nearly a year after processing issues led to a sharp slowdown in foreclosures.

Foreclosure activity began to slow last fall after problems surfaced with the way many lenders were handling foreclosure paperwork, namely shoddy mortgage paperwork comprising several shortcuts known collectively as robo-signing.

Many of the nation's largest banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.

Other factors have also worked to stall the pace of new foreclosures this year. The process has been held up by court delays in states where judges play a role in the foreclosure process, a possible settlement of government probes into the industry's mortgage-lending practices, and lenders' reluctance to take back properties amid slowing home sales.

In all, 78,880 properties received a default notice in August. Despite the sharp increase from July, last month's total was still down 18 percent versus August last year and 44 percent below the peak set in April 2009, RealtyTrac said.

Some states, however, saw a much larger increase.

California saw a 55 percent increase in homes receiving a default notice last month, while in Indiana they climbed 46 percent. In New Jersey, where last month a judged ruled that four major banks could resume uncontested foreclosure actions in the state under court monitoring, homes receiving a default notice increased 42 percent.

Huge Jump in Foreclosures Coming Up

Reality Check reports Huge Surge in Bank of America Foreclosures http://www.cnbc.com/id/44503938

Bank of America is ramping up its foreclosure processing, sending out far more notices of default to borrowers in August than in previous months, well over 200 percent more month-to-month.

A notice of default is the first stage of the foreclosure process in non-judicial foreclosures states, that is, where foreclosures do not go before a judge.

The foreclosure numbers are down very slightly year-over-year, but only because August 2010 was one of the highest foreclosure months on record, and of course was just before the "robo-signing" scandal was uncovered. Delays in processing have artificially lowered the foreclosure numbers over the past year, so this new surge is likely addressing loans that have been long delinquent, but unaddressed.

In other words, the foreclosure pipeline is filling again.

Rising Default Notices and Foreclosures a Good Thing

Housing will not bottom in many areas as long as there is a mile-high stack of foreclosures in the pipeline. Thus the faster forecloses increase the better. The bad news is this process will still take a long time.

The Foreclosure Pipeline in New York is a staggering 57 years. The pipeline is 51 years in New Jersey. Please see Bad News Overwhelms; Foreclosure Pipeline in NY is 693 months and 621 Months in NJ for details. http://globaleconomicanalysis.blogspot. ... ear-3.html

Those numbers are distorted by various delays, yet even with the pickup in foreclosures, it may takes years to get back to normal.

Of course the Obama administration is doing everything it can to stall foreclosures, exactly the wrong thing to do. A side implication of increased foreclosures will be a reduction in consumer spending by those living in their homes for years without paying a cent on their mortgage.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

http://globaleconomicanalysis.blogspot. ... ge-33.html

Tuesday, September 13, 2011 9:19 AM

Dreamland (or Nightmare) Real Estate Agents Dump Homeowners Asking Too Much; Housing Shills Still Cheerlead Others to Doom

The real estate bubble in Australia has taken its next step forward as noted in Agents dump sellers over 'dream 2010' prices http://www.heraldsun.com.au/news/more-n ... 6133874621

REAL estate agents are dumping vendors who are stubbornly holding out for "dream 2010" prices instead of dropping their reserve in order to wrap up a sale.

With the number of properties in Melbourne at record highs and listings set to increase over the spring, agents throughout the city are telling growing numbers of vendors that they can keep the house and are walking away.

Barry Plant managing director James Hatzimoisis said there came a time in the sale process when agents had to make a commercial decision and drop vendors demanding substantially more than the market was willing to pay.

"There comes a time when you have to make a commercial decision and tell them, 'I don't think I am going to be able to sell your house at that price, so it's best we go our separate ways'."

JPP Buyer Advocates' Catherine Cashmore said agents throughout the city were shedding hundreds of stale listings as they prepared for the traditional spring selling season.

While stock levels are high - RP data puts the volume of Melbourne stock at 52,611, about 34 per cent higher than this time last year - Ms Cashmore said between 10 and 20 per cent of those listings were discretionary vendors who would sell only if they could get their "dream 2010" price.

"An agent only gets paid when they sell a property so if they are investing a lot of time into something they know is not going to sell, then there is no point in wasting time on it," she said.

"We have a market full of vendors who don't need to sell and will only sell if they can get their price. They are perfectly happy to leave their property on the market in the hope that an uneducated buyer will come along and fall in love with it and pay what is on the price tag."

Surprise? Not!

Anyone surprised by this is not paying attention to me or far more importantly to Australian economist Steve Keen author of Debunking Economics. http://debunkingeconomics.com/

Steve Keen has taught me a lot. I do not agree with everything he says (or vice-versa). However, a tip of the hat goes to Keen for his early, unheeded warnings regarding debt-deflation in the US and Australia.

Keen's big mistake was being a year or so early in his home country, Australia. However, those demanding perfection will not find it from Steve Keen, from me, or from anyone else.

Debt-deflation has taken hold in the US, followed by Europe, followed by Australia. Canada will follow as well, and only a few of us have called it. Keen is one of them.

Housing Shills Still Cheerlead Others to Doom

In spite of the fact the Australia housing market has turned, bulls still stick to the absurd "housing shortage" myth. We heard the exact same nonsense in the US about Florida, Phoenix, Las Vegas, and for that matter everywhere.

There should be no debate on shortages because the idea is preposterous. Nonetheless, Bloomberg reports Home-Shortage Myth Pits Blogs Versus Banks in Call Australia Set for Crash http://www.bloomberg.com/news/2011-09-1 ... crash.html

Australia, where home prices are falling at the fastest rate in more than two years, may have a glut of properties and be set for a U.S.-style crash.

The warning from tax-reform advocate David Collyer, commentator Kris Sayce and academic Steve Keen contrast with banks and developers that say a shortage of about 200,000 homes will underpin prices. The housing bears say builders and lenders are pushing flawed government data to keep prices afloat in the English-speaking world’s costliest place to buy a home.

More than two-thirds of the government’s shortage estimate arises by including people who can’t afford housing, such as the homeless or those living in trailer parks, Sayce said. Collyer at tax-reform lobby group Prosper Australia says there’s actually a surplus of more than 250,000 dwellings after 15 years of overbuilding, while Keen argues the shortage estimate is swollen by inflated demand from handouts to property buyers of as much as A$21,000 ($22,300).

Australia has the most unaffordable homes in the English- speaking world, Illinois-based consulting company Demographia said in January, with homes costing 6.1 times the average annual income.

Price Paradox

The Housing Industry Association, a Canberra-based builders’ group, said on Sept. 1 the nation will have a shortage of about 500,900 homes by 2020 if it continues to build at the pace it has over the past 20 years. The greatest shortages will be in Brisbane, Queensland; Stirling, Western Australia; and the Gold Coast in Queensland, the group said.

Westpac Banking Corp. (WBC), Australia’s second-biggest lender, in an October report on the nation’s housing market estimated a shortage close to 200,000. Commonwealth Bank of Australia (CBA) and Australia & New Zealand Banking Group Ltd. (ANZ) -- the largest and third-largest banks -- have also published reports in the past year that attribute the run-up in prices over the past decade in part to an undersupply of housing.

Keen, who said his Debtwatch blog draws an average of 200,000 hits a day, sold his Sydney apartment in the inner-ring Surrey Hills suburb in 2008, missing out on further gains over 2009 and into 2010. He walked 224 kilometers (139 miles) from Canberra to the top of Mount Kosciuszko in April 2010 after losing a bet made in November 2008 that home prices would drop 40 percent to then Macquarie Group Ltd. economist Rory Robertson.

“Dr. Keen continues to bang his one-dimensional drum on the Australian housing market, still oblivious to the stark differences between the situation in Australia and what occurred in Japan and the U.S.,â€