Foreclosure flood: 1,000 auctions per day in California

California's foreclosure crisis passed another ominous milestone in April, when more than 1,000 foreclosed homes were  auctioned off every weekday at courthouses across the state, the auction tracking firm ForeclosureRadar reported today.

The April total of foreclosure sales at auction -- 22,838 for the state -- represents a jump of 44% over March totals and the highest level ever in California, ForeclosureRadar reports.

A separate estimate of foreclosures by DataQuick Information Systems had counted 47,171 foreclosures in the first quarter, a rate of more than 500 per day from January to March. The new statistics show every category of foreclosure statistics rose in April.

It appears the pipeline of potential foreclosures is jampacked, too: the ForeclosureRadar reported 44,101 new "Notices of Default" filings in April, a new record for California. Notices of Default are the first step in the foreclosure process.

"We expected a significant increase in auction sales based on previous default patterns," said Sean O'Toole, founder of ForeclosureRadar. "Unfortunately, the continued increases in defaults tell us that the worst is still ahead."

As lenders grow more desperate to avoid taking possession of foreclosed homes, they are offering bigger discounts at courthouse auctions, with "discounts of 40% to 50% from prior sales price common in many parts of the state," ForeclosureRadar reports. Still, the auctions are usually uneventful, and usually do not attract serious bids. "The majority of these sales received no third-party bid and reverted back to the lender despite the largest across-the-board discounts ever offered at trustee sales auctions," ForeclosureRadar reported.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo: Eviction notice posted in Orange County. Credit: Getty Images

Comments

[mike]

isn't this just what most of the people on this blog want?? lower prices and price drops? but it seems like no matter what the news is the posters seem to make doom and gloom senarios out of it.

btw these price declines don't affect the good parts of los angeles.

[Laker]

I went to couple of these court house auctions. Let me tell you that it all depends on the lender and price.
Some lenders like countrywide are NOT discounting their properties past elimination of the 2nd mortgage, and will usually ask for 80% of last sale price. These are 100% reverting to the bank. Later (weeks to months) are listed on MLS for 10-30% discount from that figure.
However, some lenders (mainly smaller ones), are actually discounting properties to 60-80% of the 1st mortgage. (The 2nd mortgage is always wiped out and is worth 0 on the dollar.) But the people that come to these auctions are investors with cashier checks of up to $200,000-300,000. They don't have the cash to bid on $800,000-1,200,000 houses....
And again, most of the properties will simply go lower after than bank takes over and lists on MLS. So it is better to wait...Only on rare occasions such as houses with very old mortgages, the bank will ask much less than the home's value.
Keep in mind that when buying in such auction, there are not inspection contingencies, no loans, all need to be cash. So when you buy a house without even knowing if the copper plumbing is there or even walls...you better not pay more than 60 cents on the dollar of actual worth.
I suspect that as loans get harder to get, and more document ion and verification will be required in the future, cash will be king! For those that can save now, will be able to buy a lot for the dollar...

[Robert in Palm Springs]

Excellent article, Peter.

We are getting closer and closer to the tipping point. House prices are still way to high, credit unavailable and compelling reasons to buy now nonexistent. The overall economic situation is gaining momentum to the downside, which will force housing prices even lower. The pool of potential buyers is shrinking.

All the pillars of our economy are starting to give way: the value of the dollar, jobs, residential real estate, consumer spending, and now commercial real estate. Commodities and equities are next. The stock market will not continue to be unaffected, nor will the price of commodities, including oil. Hang on to your cash and have some gold just in case it really goes to hell.

[MB]

anybody know how bankruptcy factors into this? Didn't the Bush administration change the bankruptcy laws when they came into office, making debt relief far more difficult?

Wonder if they had this planned all along...

anyway, ...if you walk away from your house/mortgage and declare bankruptcy, are you still liable for the entire loss on the property?

[TakeFive]

"...more than 1,000 foreclosed homes were auctioned off every weekday..."

Is the MLS showing a corresponding growth of an additional 1000+ listings per day?

I think the inventory build up is much larger than Pete's previous posting would imply. Banks are sitting on a pile of these things.

I've been montoring an REO on my way home from work. 6 months from NOD to trustee sale. 45 days to eviction notice posted (occupants had already left). It's now been two months and no SALE sign on the property No trashout either. The abandoned spa in the front yard should make a nice playground for the bugs this summer.

[Cal]

Being an all cash transaction limits their ability a lot. They should pre-qual some people and on the day of the trustee sale then just turn around and have another auction to people who have pre-qual'd for a mortgage. That would get things moving real quick. If you are willing to take 70 cents on the dollar on the court house steps then take 70 cents on the dollar plus an intermediary fee (buyers premium?) to someone to deal with the person who is buying with a mortgage through escrow. Waiting around for months to get the house on market in a declining market is just stupid.

[MyLessThanPrimeBeef]

It's sad and I empathize with desparate flippers who now have 1,000 less families per day, and that's just in California alone, clamoring for Congressional bailout.

[dwe411]

More proganda from Peter Viles.

[Gene Foss]

Know a friend of a friend that has a 1 year old Lexus in the driveway that is loaded w/ everything. Bought his wife a Hummer with all the goodies about one and half years ago. This couple is like the cutting edge with the latest fashions and yearly trips to Europe and the tropics. Lets do a fast forward to today. There house is in foreclosure, one of the cars has been repo'ed. All was financed with home equity loans. Ya Hoooo. Do I feel sorry for them? Hell no!

[CD]

As someone had mentioned here before, the banks are having trouble admitting that their loan portfolio is worth nada, as it would be then, obvious to all ,that our banks are on the brink of insolvency.

[Joseph...The Real Estate Guy]

Negative-Option-Arms are next in the Pipeline!
Most of them were made in 2005 and 2006 and were set to reset in five years.

California real estate is doomed for the next 7-10 years. We will never see the same appreciation again.

Investors are dreaming!

[baruza]

I agree with Shockg. And right now, there are almost as many Bubble blogs as there are foreclosures.

Posted by: sfvrealestate | May 13, 2008 at 07:00 AM

You were saying?

[Cal]

Next year at this time we could be at 40k a month trustee sales if sales follow the pattern they have been following since 2006. I can't imagine the banks would let it get that bad and as Peter O'Toole said the banks will start approving short sales. The mortgage insurer PMI has given the servicers a much freer hand in approving short sales and if other MI companies follow suit that will speed that part of the process up (but not those covered by second liens). Sales better start taking off (i.e. prices fall quickly) otherwise the market will be in horrible shape.

The inventory issue is a big question mark, 1k trustee sales a day would equate to a rate of sales above our current rate of sales in California yet inventory is leveling out. The gimmick auctions are becoming more frequent (Hudson & Marshall and REDC both have biggish auctions up) but not especially large and mostly inventory that has already been on market for awhile. Possibly the servicers are renting the home back to the homeowners? The numbers aren't adding up so far between closed sales, pendings, inventory and current foreclosures. When you see the numbers not making sense then that usually means a shift is underway but it takes awhile to define what that shift is because the data is inconclusive.

[Rita]

Remember how Obama was attacted for calling some
Americans bitter? He must have been reading the
blog contributers here. A bunch of misanthropic,nasty
folks.

[MyLessThanPrimeBeef]

Small correction.

Like Voltaire, who didn't believe in discussing weighty topics like philosophy in front of the servants, that remark by Mr. Sphinx Obama was for paid supporters only. I would suggest refraining from using it in public on Cassandras.

[MyLessThanPrimeBeef]

It looks like those who thought to profit from the bubble are taking a bath now.

[Hugo Boss]

Most loans require 10% downpayment...NINJA Loans have been eliminated. Banks are actually underwriting loans thus eliminating a large pool of buyers are current prices (remember my magic formula ...Adjusted Gross Income * 3 = Avg Price)

[Paul H]

Hey Gene Foss...Reel those horses in, cowboy! A lot of people made a lot of bad decisions during this period. No need to rub it in. Also, don't cheer too loudly, you're gonna pay to put them back on their feet anyway, whether you like it or not. Plus you never know....you might be the next one getting foreclosed or repo'd on! Not a nice feeling.

[Bubba]

"A bunch of misanthropic,nasty folks."
With a good sense of reality.
This time next year, today will look like a picnic in the park for homeowners currently underwater by just a little bit. This is going to get much worse. Google Mr. Mortgage for details on today's report.

[Rita]

Mean mean mean mean people.
I would not be surprised if many of these
mean bloggers have no sympathy for the
chinese schoolchildren buried in rubble,...
lets see, anyone out there living in
earthquake country want to tempt fate?
Get up off your mothers couch and be mean again,...

[Cal]

For those who don't read Calculated Risk (and you should ask yourself why you don't!) they posted a link to an hour long radio show that was just excellent:

http://www.thislife.org/Radio_Episode.aspx?episode=355

[Sharon Burton]

I agree that we may have tipped over. There is simply no reason why anyone would buy a house right now. It's pretty clear that the bottom is still to happen. And there's no credit available even if people wanted to buy a house.

In Riverside, our house has gone from about 450k to ~280k in 2.5 years. So that's, what, a little more than 150k drop in 30 months? 5k a month? About $1250 a week?

Another 30k (6 months?) and we're upside down. I thought we would be safe at ~60% of the comp value when we refi-ed 3 years ago. I knew it would fall, but I never expected it to fall this far. We'll hang on and wait it out, but man...

[gerald]

"don't cheer too loudly, you're gonna pay to put them back on their feet anyway, whether you like it or not"

Seems to me bail out Hillary and gas tax holiday McCain are going down in flames. Keep dreaming of a bailout.

Government help is appropriate when a disaster outside our control takes place as in a hurricane, an earthquake, or a foreign government dumping a product. The government didn't interfere after the stock bubble burst and things went back to normal. There were some of us smart enough to get out of this crazy market and/or buy something we could afford.

Instead of trying to steal our money via the government you should try to read and learn from the information being provided in this blog so that next time you are not bamboozled when you are offered debt you can't afford and told you are going to make money.

[E]

This is getting sooooooo funny.

A bunch of bitter loanowners coming in here and calling us bitter, mean, saying that we probably don't care about the children in China and on and on and on.

Then they scold us about how we're all gonna be in the same boat together. In fact, I have heard this one for about a year.

And then there is the obligatory insult about us all being on our "Mommas Couch".

Well...Flippers have lost their homes, REIC employees have lost their jobs (or the majority of their once FAT incomes), HELOC lifestyle-whores are feeling the pinch, BMW's are being returned to the lease lots.

Same boat?

Hardly. Your boats are sinking because of the choices you made.

Mine still floats just fine.

[MyLessThanPrimeBeef]

Mean people.

Tough world.

Still, we have sympathy for innocent victims.

Should we not eat meat?

How about killing vegetables?

Is that mean?

It's true. If you play Mozart, you grow bigger lettuces. When you chew on them, when you grind them to pieces, don't you think they hurt? When you tickle them, do they no laugh? When you prick them, do they not bleed something?

Mean, mean, mean vegetable eaters.

Tough, tough, tough world.

Well, C'est la Vie!

Oh, please donate to Red Cross for earthquake relief and down with flippers and speculators! And I pray they save as many people and pandas as possible and hopefully the famous archaeological site, Shanxingdu, is not too badly damaged. I love those brass face masks from the pre-Qin era.