New Foreclosures August 2008
| National Trends | JUN. | YTD. | ||||||
|---|---|---|---|---|---|---|---|---|
| New Foreclosure Filings | 141,866 | 1,347,540 | ||||||
| Foreclosure Sales | 54,034 | 355,901 | ||||||
| Avg Sales Price | $ 171,152 | $ 164,506 | ||||||
| Total Savings |  29 % | 30 % | ||||||
| ||||||||
FORECLOSURE ACTIVITY INCREASES 12 PERCENT IN AUGUST
By RealtyTrac Staff
Activity Up 27 Percent From August 2007
IRVINE, Calif. – Sept. 12, 2008 – RealtyTrac® (realtytrac.com), the leading online marketplace for foreclosure properties, today released its August 2008 U.S. Foreclosure Market Report™, which shows foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 303,879 U.S. properties during the month, a 12 percent increase from the previous month and a 27 percent increase from August 2007. The report also shows one in every 416 U.S. households received a foreclosure filing during the month.
RealtyTrac publishes the largest and most comprehensive national database of foreclosure and bank-owned properties, with over 1.5 million properties from over 2,200 counties across the country, and is the foreclosure data provider to MSN Real Estate, Yahoo! Real Estate and The Wall Street Journal’s Real Estate Journal.
“In August the total number of U.S. properties that received foreclosure filings as well as the national foreclosure rate were both the highest we’ve seen in any month since we began issuing our report in January 2005; however, the annual increase of 27 percent was actually substantially lower than in previous months this year, when it was hovering around 50 to 65 percent,” said James J. Saccacio, chief executive officer of RealtyTrac. “The lower annual percentage increase this month is due to a big spike in activity last August — particularly in default activity. Over the past few months we’ve seen annual increases in default activity and auction activity moderating, and that trend continued in August, with default activity up just 10 percent from a year ago and auction activity up 7 percent from a year ago.
“The increases in default and auction activity could be slowing down partly as the result of new legislation passed in several states that is designed to give homeowners in distress more time before foreclosure proceedings are initiated. In addition, some lenders are adopting loan servicing guidelines that encourage more pro-active approaches to helping homeowners avoid foreclosure. The question now is whether these measures will actually reduce foreclosures or simply cause a temporary lull in foreclosure activity.”
Nevada, California, Arizona post top state foreclosure rates
With one in every 91 households receiving a foreclosure filing in August, Nevada continued to document the nation’s highest state foreclosure rate for the 20th consecutive month. Foreclosure filings were reported on 11,706 Nevada properties, a 16 percent increase from the previous month and an 89 percent increase from August 2007.
California continued to document the nation’s second highest state foreclosure rate, with one in every 130 households receiving a foreclosure filing in August, and Arizona registered the third highest state foreclosure rate, with one in every 182 households receiving a foreclosure filing during the month.
Other states with foreclosure rates ranking among the top 10 were Florida, Michigan, Georgia, Ohio, Colorado, Illinois and Indiana. Michigan, Georgia, Ohio and Colorado all reported annual decreases in foreclosure activity.
California accounts for one-third of U.S. foreclosure activity
Foreclosure filings were reported on 101,724 California properties in August, one-third of the national total and the most of any state. The state’s foreclosure activity increased more than 40 percent from the previous month and more than 75 percent from August 2007.
Florida posted the second highest total in August, with foreclosure filings reported on 44,000 properties during the month — a 4 percent decrease from the previous month but still up nearly 30 percent from August 2007. One in every 194 Florida properties received a foreclosure filing in August, the nation’s fourth highest state foreclosure rate.
Foreclosure filings were reported on 14,333 Arizona properties in August, the nation’s third highest state total. Arizona foreclosure activity was up 7 percent from the previous month and nearly 63 percent from August 2007.
California, Florida and Arizona together accounted for more than half of the nation’s foreclosure activity.
Despite a nearly 13 percent annual decrease in foreclosure activity, Michigan documented the nation’s fourth highest state foreclosure total in August, with foreclosure filings reported on 13,605 properties during the month.
Other states with total properties with foreclosure filings among the 10 highest were Nevada, Ohio, Texas, Illinois, Georgia and New Jersey.
California cities dominate top metro foreclosure rates
California cities accounted for eight of the top 10 metro foreclosure rates out of the 230 metro areas tracked in the August report. Stockton was No. 1, with one in every 50 households receiving a foreclosure filing during the month, followed by Merced, Modesto, Vallejo-Fairfield and Riverside-San Bernardino in the Nos. 2 to 5 spots. Other California cities in the top 10 were Bakersfield, Salinas-Monterey and Sacramento in the Nos. 8 to 10 spots.
The Cape Coral-Fort Myers, Fla., metro area dropped from the top spot in the metro foreclosure rate rankings in July to No. 6 in August thanks in part to a 3 percent dip in foreclosure activity. One in every 66 Cape Coral-Fort Myers households received a foreclosure filing in August, more than six times the national average.
Las Vegas registered the seventh highest metro foreclosure rate in August, with one in every 75 households receiving a foreclosure filing during the month. The metro area’s foreclosure activity was up nearly 14 percent from the previous month and 83 percent from August 2007.
September 24, 2008
The Mortgage Mess Began on Main Street
By Steven MalangaJournalists like simple stories with clear-cut villains who are easy for readers (and journalists themselves) to recognize. And so, as the financial crisis has brought Wall Street to its knees in recent weeks, it’s become so much easier for journalists to cope. Time Magazine, for instance, tells us in its current issue that Wall Street “sold out” America, while the New York Times decries “Wall Street’s ….real estate bender.” John McCain has helped out the scribes by attributing the problems we now face to greed on Wall Street.
Listening to this sort of chatter, it’s easy to forget that this mess began with a heap of bad mortgages made by American consumers who never came within a hundred miles of the card sharps on Wall Street. The inability (and in a good deal of cases, the unwillingness) of these same ordinary Americans to pay back these loans, many of which are sitting in mortgage backed-securities held by institutions around the world, helped tilt us toward this systemic threat to our financial system. And even as we focus on bad bets and lousy leverage ratios on Wall Street, these toxic mortgages continue to unwind, and as they do, we are getting a better look at how they were made-and it’s not pretty. If it wasn’t clear before, it should be now, that speculation and fraud-much of it on the part of borrowers-were rampant.
As I have observed before, mortgage fraud soared in the run-up to this mess, and believe it or not, it’s continuing to rise. The FBI says that reports of suspicious mortgage activity increased by 10-fold from 2001 through 2007, and rose another 42 percent in the first quarter of 2008. As more and more mortgages have gone bad, researchers have looked into troubled portfolios and found startling rates of deception. BasePoint Analytics, a research firm, has estimated, for instance, that 70 percent of subprime loans that default before they reset (exactly the kind that trouble the market right now) contain some kind of misrepresentation by the borrower, lender or broker, or some combination of the three.
One big category of deception has been so-called ‘no-doc’ loans, where a borrower agrees to pay a slightly higher interest rate in exchange for not documenting his income. Originally designed for the growing number of self-employed workers in America who don’t have ready documentation from an employer, these mortgages became known as ‘liar loans’ because many people without sufficient income used them to qualify for financing they otherwise couldn’t get. One lender that compared what 100 applicants claimed as income on no-doc loans to what they reported to the IRS on their tax returns found that in 60 percent of cases borrowers were exaggerating their income by as much as half (or lying to the IRS).
Speculators are also part of the problem. As the housing market rose, more people got into the game of betting on higher prices by purchasing homes which they intended to flip quickly without ever occupying. As this became a popular form of investing, applicants starting lying about their intentions. They were trying to fool developers who grew wary of selling too many homes in new developments to people who would never occupy them, since these are the buyers most likely to walk away from a mortgage when the market turns down. BasePoint Analytics has estimated that this form of misrepresentation accounts for 20 percent of mortgage fraud.
Whether they were cheating or not, speculators clearly played a big part in the mortgage mess. According to a report earlier this month by researchers at the Mortgage Bankers Association, the vast majority of delinquent mortgages and homes in foreclosure continue to be in a handful of states where the housing bubble was largest and where speculation was common, led by California and Florida, which together accounted for a whopping 58 percent of all subprime adjustable rate mortgages that went into foreclosure in the second quarter of this year. In fact, so concentrated are the problems that only eight states have foreclosure rates that are above the national average. And while the rate of new foreclosures for subprime ARMs in the quarter was a whopping 6.63 percent, for traditional fixed-rate mortgages, it was only 0.34 percent. “For the quarter, a majority of states saw relatively little change” in their foreclosure numbers, the MBA researchers noted.
Against this background, fraud is not only growing but continues to be concentrated in states where the market meltdown has taken place-again led by Florida and California. In those states, moreover, the fraud reports are most common on properties near the coastlines, that is, in places where there is an enormous amount of speculation and where many purchases are for investment purposes.
The FBI is not so surprised by the trend. It warns that a sinking market is ripe for new types of fraud, as individuals try to get out of a fiscal mess using further misrepresentations, or as scam artists perpetrate fraud under the guise of helping consumers stuck in bad loans escape their troubles. Given that we seem to have had a generation of mortgage borrowers who at the least didn’t understand the types of loans they were taking out, and at the worst were committing fraud themselves, the FBI’s latest warning suggests we won’t see the end of the bad mortgage crisis anytime soon.
On the bright side, there won’t be a lot of investment banks packaging these new bad loans into toxic securities that threaten the world financial system.
Paul Krugman
A sneaking suspicion
So now the whole rationale for the plan is “price discovery”: we’re going to throw lots of taxpayer funds into the pot because that will let us find the true values of troubled assets, which are higher than the fire sale prices out there, and so balance sheet will improve, confidence will return, etc, etc..
So I just did a Nexis search trying to find out when Paulson and Bernanke started talking about price discovery, which we’re now told are at the core of the plan’s logic. And the answer is …
Yesterday.
I can’t find any use of the term, or even a hint of the argument, until yesterday’s Senate hearings.
One possible explanation. It wasn’t until yesterday that they realized that it would actually be necessary to explain themselves.
But there’s another possible explanation, which I find terrifyingly plausible: the plan came first, and all this stuff about price discovery is an after-the-fact rationalization, invented when people started asking questions.
It has seemed very strange to me that such a supposedly crucial economic program would be based on such an exotic argument. My sneaking suspicion is that they started with a determination to throw money at the financial industry, and everything else is just an excuse.
This Bailout--Cost Per Taxpayer? $10,000 or more a piece?
Think about it. We have 300m people living here.
We are going to spend a trillion. But not all 300m people pay taxes. really, only about 100m pay taxes, by virtue of people being retired, too young, etc.
That's how much a person? $10,000 a taxpayer.
Worth it?
Would you write a check right now for this?
java says -- Better question: What would you do if this was a check to you instead of a trickle-down bailout?
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