Archive for August, 2013

Distressed Inventory Fading Fast as Housing Market Strengthens

08/29/2013BY: ESTHER CHO

As the housing market heals, foreclosure inventory is depleting quickly, CoreLogic reported Thursday.

In July, about 949,000 homes were in some stage of foreclosure, down 32 percent from 1.4 million a year ago. Foreclosure inventory also showed a 4.4 percent decline from June. Year-to-date, foreclosure inventory is down by 20 percent.

Currently, about 2.4 percent of homes with a mortgage are in foreclosure inventory, the lowest level since March 2009.

In addition to shrinking foreclosure inventory, CoreLogic also reported steep declines in completed foreclosures and serious delinquencies.

According to the data provider’s estimate, about 49,000 properties were lost to foreclosure in July, down 25 percent from 65,000 in July 2012.

From June to July, completed foreclosures fell by 8.6 percent from 53,000 in the prior month.

At 5.4 percent, the serious delinquency rate decreased to the lowest level since December 2008, according to CoreLogic. The rate represents fewer than 2.2 million mortgages.

“Continued strength in the housing market will contribute to our outlook for ongoing improvement in the stock of distressed assets through the end of this year,” said Mark Fleming, chief economist for CoreLogic.

According to CoreLogic, the decreases were apparent across the country, with every state reporting an annual decline in foreclosures.

“Not surprisingly, non-judicial states have come the farthest the fastest in reducing shadow inventory and lowering delinquency rates,” noted Anand Nallathambi, president and CEO of CoreLogic.

Florida took the lead again as the state with the highest number of completed foreclosures. Over the last 12 months, about 110,000 homes were lost to foreclosure in Florida. California followed with 65,000 completed foreclosures. Other states in the top five were Michigan (61,000), Texas (45,000), and Georgia (41,000).

Florida also held the highest percentage of homes in foreclosure inventory, at 8.1 percent. New Jersey’s foreclosure inventory rate of 5.9 percent put it at second, with New York (4.7 percent), Connecticut (4.0 percent), and Maine (4.0 percent) filling out the top five.

However, in 36 states, foreclosure inventory sits below the national rate of 2.4 percent.

Home Sales Stage a Comeback in July


After observing a slowdown in sales throughout June—typically the peak selling month for the year—online brokerageRedfin reported a rebound in July, though other market indicators continue to cool.

According to Redfin’s data, “this July saw a healthy jump in homes sold throughout most of the 19 markets covered in this report,” improving 3 percent month-over-month and 17.6 percent year-over-year from a rather disappointing July 2012.

In fact, according to the Seattle-based brokerage, July 2013 saw the highest number of homes sold in the past four years, with the 19 markets together seeing about 94,000 sales.

“July’s numbers are probably the result of buyers shaking off the impact of mortgage interest rate increases, and opting to lock in rates before they rise further,” explained analyst Tommy Unger. “Chicago led the nation with

nearly 12,000 homes sold, up a strong 5.7 percent in July, and 36.9 percent year over year.”

While sales numbers picked up, Redfin believes the gains won’t last.

“With less inventory, higher interest rates and continued buyer fatigue, August won’t see the same 7 percent month-over-month sales increase as in 2011 and 2012,” Unger said. “In fact, based on current closed and pending sales, we expect a slight month-over-month drop in home sales for next month.”

At the same time, reports on home price growth and inventory were less positive in July.

Nationally, home prices per square foot were up 1.1 percent from June and 19.3 percent from July 2012, Redfin reported. However, a closer examination shows four of the 19 areas tracked posting monthly price decreases: Austin (-2.6 percent); Washington, D.C. (-2.5 percent); Philadelphia (-1.5 percent); and Boston (-0.9 percent).

Meanwhile, the number of homes for sale in July fell 4.6 percent month-over-month, outdoing the 4 percent drop recorded at the same time last year. Year-over-year, inventory fell 30.6 percent. With the exception of San Jose (which reported a 7.1 percent monthly increase in for-sale homes), inventory was down on a monthly basis in all tracked markets.

“The slight increase in inventory from May to June was partially attributable to the lower sales volume,” Unger said. “Now, it looks like inventory is back on its seasonal decline heading into fall.”

California Dominates Turnaround Towns List; Detroit Claims Spot


California markets dominate’s list of Turnaround Towns for the second quarter of this year, claiming the top four spots on the list and six of the top 10.

While California may take the most spots on the top 10 list, says Detroit’s presence on the list is “most noteworthy.”

“Though the city recently filed for bankruptcy, the market nonetheless posted strong improvement in the second quarter,” according to

In fact, Detroit may soon be “one of the most balanced markets in the nation,” according to Steve Berkowitz, CEO of Move, an online real estate network.

The top 10 “Turnaround Towns” are determined by an algorithm that relies on data including inventory levels, median list prices, median number of days on market, and search and listing activity on

Detroit claimed the No. 7 spot on the list after its inventory age fell to the second-lowest in the nation at 45 days on market. The city’s list price increased 37.8 percent from the second quarter of last year to the second quarter of this year, and its inventory declined 26.5 percent.

The No. 1 spot went to Oakland, California, where the median number of days a home spends on the market is just 15—the lowest in the nation.

Oakland also claimed the greatest increase in list price across the nation in the second quarter on an annual basis. The median list price in the second quarter of this year was $479,000, up from $339,000 in the same quarter last year.

Oakland’s inventory declined more than 34 percent over the same period.

Orange County, California, took the No. 2 spot on the list, while also staking claim to the country’s greatest decline in inventory over the year ending in the second quarter of this year – a 36.6 percent decline.

Orange County’s home prices were up 29.4 percent, and the median number of days a home spent on the market in the second quarter was 51.

The third and fourth spots on the list went to Santa Barbara-Santa Maria-Lompoc, California, and San Jose, California, respectively.

Santa Barbara’s median list price rose 34.3 percent to a notable $685,000 over the year.

Seattle, Washington; Los Angeles, Calfornia; Portland, Oregon; San Diego, California; and Reno Nevada also made it onto the second quarter list of top 10 “Turnaround Towns.”

 An Easy Guide to Newspapers (from the Internet, our unparalleled & unimpeachable source of information!)

1.   The Wall Street Journal is read by the people who run the country.

2.   The Washington Post is read by people who think they run the country.

3.   The New York Times is read by people who think they should run the country, and who are very good at crossword puzzles.

4.   USA Today is read by people who think they ought to run the country but don’t really understand The New York Times.  They do, however, like their statistics shown in pie charts.

5.   The Los Angeles Times is read by people who wouldn’t mind running the country, if they could find the time, and if they didn’t have to leave Southern California to do it.

6.   The Boston Globe is read by people whose parents used to run the country and did a poor job of it, thank you very much.

7.   The New York Daily News is read by people who aren’t too sure who’s running the country and don’t really care as long as they can get a seat on the train.

8.   The New York Post is read by people who don’t care who is running the country as long as they do something really scandalous, preferably while intoxicated.

9.   The Miami Herald is read by people who are running another country, but need the baseball scores.

10.  The San Francisco Chronicle is read by people who aren’t sure if there is a country or that anyone is running it; but if so, they oppose all that they stand for.  There are occasional exceptions if the leaders are handicapped, minority, feminist, or atheists who also happen to be illegal aliens from any other country or galaxy, provided of course, that they are not Republicans.

11. The National Enquirer is read by people trapped in line at the grocery store.

12.   The Denver Post is read by people who have recently caught a fish and need something to wrap it in.

Hard Money New State Rankings Report — Annual State Rankings List for 2012, Funded Hard Money Real Estate Loans.

Alternative Lending Magazine, has released the annual hard money state ranking list for 2012. This year’s list features a change in 4 of the top 10 rankings. The list covers total funding statistics including residential, commercial and land transactions.

Mortgage loan origination is up 34% year over year in 2012. Hard Money mortgage loan origination is up 88% year over year. You can see the trend and the need for alternative lending in every single state.

Palo Alto, CA (PRWEB) February 04, 2013

Americans engaged in a staggering 8.6 million mortgage loan originations in 2012. Though still a long way off from the historic level of originations that preceded the mortgage crisis, 2012 was the strongest full year of originations we’ve seen since 2007. Volumes were up approximately 34 percent year over year, with about 8.6 million new loans originated. And, while the majority of these new loans were government-backed – 84 percent in 2012 – the trend over the last four years does suggest a slowly resurgent non-agency market. The largest sub-segment of this non-agency market remaining is the non-bankable portfolio market. By far the largest segment in the non-bankable market is hard money. All estimates and trends show hard money to be as much as 1.8% of all mortgage loan origination in 2012.

A hard money loan (also known as private money) is a specific type of asset-based loan financing secured by the value of a parcel of real estate. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional loans (such as FHA or FNMA) because of the higher risk. A borrower’s credit or tax returns are not as important as the asset or multiple real estate assets used as security for the investor. Many of these hard money loans close in a matter of days rather then months. Most borrowers are given a term of 1-3 years to pay back the entire loan amount. The particular paperwork differs state by state, but many of these loans follow the same laws and regulations bank do.

The Hard Money State Rankings List for 2012 is compiled through the use of accurate, real-time, internet-based data collected from housing funding sales trends and lender behaviors such as recorded deeds and final closing statements. Alternative Lending Magazine is an expert in the field of hard money funding programs and alternative lending scenario modeling.

Here is Alternative Lending Magazine’s annual Hard Money State Rankings List for 2012:

1. California
2. Texas
3. Florida
4. Illinois
5. Arizona
6. Georgia
7. Ohio
8. Michigan
9. Nevada
10. New Jersey
11. Maryland
12. New York
13. Pennsylvania
14. North Carolina
15. Virginia
16. Tennessee
17. Louisiana
18. Indiana
19. South Carolina
20. Washington
21. Utah
22. Oregon
23. Alabama
24. (Tie) Missouri – Kansas
25. (Tie) Missouri – Kansas
26. Colorado
27. New Mexico
28. Oklahoma
29. West Virginia
30. Arkansas
31. Iowa
32. Wisconsin
33. South Dakota
34. Rhode Island
35. Massachusetts
36. Minnesota
37. North Dakota
38. Wyoming
39. (Tie) Connecticut – Idaho
40. (Tie) Connecticut – Idaho
41. Kentucky
42. Nebraska
43. Vermont
44. Mississippi
45. New Hampshire
46. Montana
47. Hawaii
48. Delaware
49. Maine
50. Alaska

When Judicial and Non-Judicial Lines Blur

Herb Blecher

In January 2010, at the peak of the housing crisis, national mortgage delinquencies topped out at 10.6 percent of all active loans. As we know, conditions have improved significantly since then. As of the end of May 2013, that number was 6.1 percent – representing a 43 percent decline from the peak.

However, as LPS has been reporting for years, there continue to be large differences in distressed inventory resolution between judicial and non-judicial states. The pace of recovery has clearly diverged between the two and is greatest when we specifically focus on those loans in foreclosure.

Even after years of continual improvement in the national foreclosure rate (now down 20 percent from its peak), judicial states still have foreclosure inventories that are more than three times the level of non-judicial states.

Back in January 2010, both judicial and non-judicial delinquency rates peaked at nearly the same level – 10.5 percent and 10.6 percent, respectively. What’s different is how things have progressed since that point.

Ranking the states by total non-current loans (delinquencies and foreclosures combined), we saw that six of the top 10 states at the peak of the crisis were non-judicial. As of May, only three non-judicial states remain on that list, and if we’re looking solely at foreclosure inventory, there’s just one: Nevada.

The root of the divergence is clearly constriction at the end-point of the process. In the last three years, the monthly percentage of inventory that goes to foreclosure sale in non-judicial states has averaged 3.5 times that of judicial states.

However, new legislation and court rulings in various states are exacerbating or overriding the basic judicial vs. non-judicial distinction.

Foreclosure notice and gavel

Consider New York and New Jersey – both judicial states – where foreclosure process requirements and penalties all but brought foreclosure sales to a halt. Since implementing these requirements in 2010, foreclosure sales in New York and New Jersey are 72 percent below what they were in January of that year. And while foreclosure rates in judicial states have declined about 3 percent since then (vs. a 44 percent drop in non-judicial states), New York’s and New Jersey’s have increased by 57 and 42 percent, respectively.

More recently, California, Nevada and Massachusetts – all non-judicial states – have implemented legislation or experienced court rulings that have likewise lowered the rate of foreclosure sales. The result is that these non-judicial states are now behaving more like their judicial counterparts.

The impact of these more recent changes has been less apparent to date. Still, foreclosure sale activity indicates that there is reason to believe that impact is on the horizon:

  • Nevada’s 2012 legislation requiring an affidavit from the lender prior to foreclosure has pushed foreclosure sales down 60 percent.
  • The 2012 Massachusetts Supreme Court ruling requiring lenders to prove ownership at time of foreclosure sale has resulted in an 80 percent drop.
  • California’s Homeowner’s Bill of Rights (implemented in January 2013) resulted in a 35 percent decline in foreclosure sales through Q1.

Clearly these new process changes have altered the previously established dynamic of the broad judicial vs. non-judicial distinction.

In addition to creating additional operational challenges for lenders, this makes assessing the recovery, estimating loan-level losses and evaluating future risk more challenging. Watching for any collateral impacts from these process changes – and tracking any new changes at the state level – will be critical to portfolio risk management in the post-crisis environment.

Herb Blecher
Senior Vice President, LPS Applied Analytics
Lender Processing Services