Foreclosures: Good News, Bad News

The housing market is getting back its sea legs, or the housing market is still wobbling. Depending upon what set of statistics you want to look at, you can make the case for either scenario.

The good news from HousingWire:

In particular, roll rates — which measure the volume of loans moving from good to bad, and from bad to worse — improved during June, with new delinquencies dropping to their second lowest level in the last year, the firm said. The percentage of delinquent loans moving from bad to worse declined across all product types, as well. Which is at least some good news for a market that has been in dire need of something positive for the better part of two years running.

The bad news from HousingWire:

But for the nascent improvements now being seen, there remain numerous hurdles that suggest the nation’s housing market isn’t really out of the woods just yet. In particular, foreclosures soared to new record highs in June, LPS found: The national foreclosure inventory rate during June was 2.86%, up 2.5% from one month earlier and a huge increase of 86.1% from year ago levels. Total delinquencies rose as well, to 8.58%, up 44% from one year earlier.

Reflecting the mortgage crisis’ evolution away from all things subprime, prime jumbo mortgages continue to fare the worst, comparatively: foreclosures among good-credit borrowers with high loan balances are up a whopping 580% since Jan. 2008, LPS said.

And it’s not just the overall inventory of foreclosures that is increasing, either: New foreclosures are on the rise, as well. “Foreclosure starts in June increased 1.6 percent to the second highest level on record, while reinstatement and recidivism rates are not yet showing signs of improvement,” LPS said in a statement. Backing this sort of logic up, July ABX remittance data released Tuesday found that modification rates had actually declined slightly during the month among most of the tradeable indexes. (The ABX is a synthetic tradeable index referencing a basket of 20 subprime mortgage-backed securities.)

I’m inclined to take this overall as a positive. There’s a big pig in the middle of the housing python and it’s slowly making its way through the snake. So long as there aren’t more pigs going in the front end — and it appears as if that might be the case — then you can start to see an end to the problem.

That doesn’t mean there isn’t a lot of pain yet to come, just that the pain won’t be eternal.

Comments

[Dave Wrixon:]

When the banks actually start foreclosing rather pretending problems don't exist, is the the moment I will start to believe that they are strong enough to ride this thing out, and not before.

Jul 29 02:33 PM

[PainfullyAware:]

The Alt-A and other "Nutty Loans" in the second wave of stupidity is just beginning to reset - a ride of "Potential Foreclosure" until around the summer of 2011.

Since "Forestall The Pain" has been the mantra - Will the second wave "Capsize" the system?

Barney Frank is attempting to save his skin and others by "Using The Strong Arm Of Government" to Force "Bad Business Practices" Again. Hows That "Community Reinvestment Act" Working ???

Representation To ME Means - Read The Bills You Sign Into Law !!!

When You Let Chimps Drive The Only Certainty Is An "Accident".

Jul 30 01:43 AM

[ksmithdc:]

Agreed 100% with Dave Wrixon. Well said, sir!

Jul 30 12:49 PM

[Jeff Nielson:]

There is no "good news". There were 1.9 million foreclosures in the first half of the year, and a total of 4 million expected by the end of the year - meaning foreclosures will INCREASE in the 2nd half of the year.

And this estimate comes from RealtyTrac - an real estate-friendly institution. In other words, it almost certainly is a much-too-optimistic forecast.

Meanwhile, U.S. banksters are only listing about 1/3 of their foreclosed properties on the market - and listing less and less of them as foreclosures INCREASE. This is part of the reason for the MOMENTARY "stabilization" of U.S. home prices.

You need to educate yourself before attempting to write about this sector again.

Jul 30 12:54 PM

[billddrummer:]

Foreclosures are just a part of the problem. In Nevada, a Trustees' Deed is recorded when a property is seized by its lender. That occurs after the foreclosure notice is filed, and after the cure period (to give the borrower time to make good on the debt) expires. The time between foreclosure and trustee's sale can range from 35 days to several months, depending on how efficient the lender's processing center works.

In Washoe County, the second most populous county, more than 1500 trustees deeds have been filed since 1/1/09. Monthly volume on these deeds spiked in June, with more than 350 recorded that month alone. July's volume is set to surpass that. As you see, more than 20% of the total number took place in June.

On the sales side, approximately 220 homes that were bank-owned sold in June 2009. Through the year, approximately 400 fewer homes sold than were repossessed.

So it seems that here, more food is coming into the python's mouth than leaving.

I'm not familiar with other locales, but here in Northern NV, things are bad and getting worse.

Jul 30 10:22 PM