More L.A. County foreclosures on the way

Los Angeles, get ready for another wave of foreclosures.    

First American CoreLogic, which has a vast store of data on actual mortgages, reports today that Los Angeles County mortgages delinquent by 90 days or more in March were up to 8.9% of the total -- more than double the percentage of March last year.

Foreclosure filings, the next step in the foreclosure process, were issued on 2.3% of L.A. County mortgages in March, up from 1.9% in March 2008.

Repossessions, the final step in foreclosure, which results in a property being taken by the lender, were done on 1.6% of L.A. County mortgages in March, up from 1.2% in March 2008.

In recent months, the spike in default notices has not been matched by a proportionate number of foreclosure filings and repossessions. We don't know if lenders are simply too swamped to process the defaulting loans or if there is a deliberate effort to control the pace of foreclosed homes hitting the market.

First American CoreLogic notes, however, that a 12-month look shows foreclosure filings have ramped up. From April 2008 through March 2009, L.A. County averaged 412 foreclosure filings a day, compared with 228 a day during the previous 12-month period.

— Peter Y. Hong

Comments

[Ace]

Wow... that 9 percent is a pretty shocking number.

"In recent months, the spike in default notices has not been matched by a proportionate number of foreclosure filings and repossessions. We don't know if lenders are simply too swamped to process the defaulting loans or if there is a deliberate effort to control the pace of foreclosed homes hitting the market."

I think it is a combination of lenders being swamped and also lenders now trying to work short sales so they do not have to foreclose.

I haven't been a big believer in the banks controlling the foreclosure market by controlling the pace conspiracy theory.

[El Patron]

ONCE AGAIN PEOPLE: look at the Credit-Suisse mortgage loan reset chart. The second wave of forclosures started just last month and will crecendo somtime in late 2010 or early 2011. Add a dose of 12% unemployment, ineffective government intervention, happy talk from the REIC, and seller's mistaken belief that although their neighbors' houses have gone down in price, theirs has not, and you get the bottom happening sometime in late 2011, followed by 5-10 years of stale prices.
Never forget: the market ALWAYS reverts to the mean!

[LA-renter]

I agree with Ace.

It's human nature to create incredible and efficient conspiracies for loathsome ends. (Remember the stated reason for the Iraq War.)

Can any anonymous commenter here enlighten us on what's happening on the bank side of foreclosure?

[mar vista pete]

Can any anonymous commenter here enlighten us on what's happening on the bank side of foreclosure?

This story in the NYTimes sheds some light: http://tinyurl.com/q43ewy

The author, Times reporter Edmund Andrews, tells of his own personal "credit crisis"; he hasn't paid his mortgage in 8 months; he's trying to talk to someone from his bank (relatively healthy Chase), and he's waiting.

I think the banks are swamped. They're just not ready for this. It's a mess.

[srla]

While conspiracy theories are generally ridiculous on their surface, collusion is a whole other matter. I feel it is entirely possible that there is collusion occurring between the top few banks to delay the release of repossessed properties and keep from flooding the market.

One need only listen to the warnings of economists like Simon Johnson and Joseph Stiglitz or regulators like William Black and Brooksley Born to get a sense of the extreme hubris of the current financial elite. As Dick Durbin recently proclaimed, the banks currently control the Congress. Angelo Mozillo notwithstanding, none of the villains that participated in the massive derivatives and mortgage fraud and brought about the current collapse have been brought to justice; in fact, to the contrary, they have been rewarded and bailed out.

So why on Earth would these same bankers now fear colluding to keep housing from falling further? In my book, they wouldn't, especially since it is the stated goal of the administration and Congress to stop prices from falling and "reinvigorate" the housing market. What's a little collusion amongst oligarchs if it helps realize stated government goals (while also lining their own pockets)?

[Daniel]

Haven't any of you figured out yet the newspaper industry was complicit in the bubble? They are still cheerleaders for an economic recovery which is not happening until losses are actually accounted for in the banks. Nobody wants to do that as it will drive down prices and cut the tax base.

[Ace]

The banks are definitely overwhelmed. I have run into countless people who are 6 months behind on their mortgage and still not foreclosed upon.

I was a little bit of a believer that banks were holding good inventory mainly because many of the foreclosures that I have seen are on busy streets and in poor condition. Now I just believe that those are the first houses that people who are upside down and behind let go. They are less likely to keep fighting if they don't even like the house.

Also, I keep a pretty good eye on the territory that I mainly sell houses in and also walk another neighborhood all of the time with my dog. I just don't see many houses that look foreclosed upon and are not for sale. I know the banks are not mowing lawns.

[John]

Mar Vista Pete's URL is infected. Don't click that link.

[tonylogan]

It is only a conspiracy theory if it is not true.

When it was profitable to sell CMS's, the banks were hiring people hand over fist to come in and process mortgage paperwork. They were never "too swamped" to sell another mortgage to a deadbeat meth-head.

The banks know it is more profitable for them to sit on much of their inventory, hoping for a turnaround in the market or a taxpayer funded bailout. Or at a minimum, they can keep the asset on their books at inflated values.

Hiring additional staff to work on losing the banks money faster is not a priority. Now if a good enough bailout comes along, you just won't believe how fast they can get that paperwork moving.

[Michael Snyder]

srla, Here hear!

[Steve]

The trend is why the hell pay your mortgage in CA. I presently live out of state and half my calls for rental houses are people who want to leave the state. I am sad to say for Cali it is over with.

[long time listener . . .]

Ace,

While I don't believe in conspiracy theories, I have noticed at least four bank-owned homes in the neighborhood I walk the dog in in Pasadena. Fairly nice area, yet within a 4 block radius of my house, we pass at least 4 to 5 empty houses that are not being kept up (except for the once every two months mow down) that are also not on the market. They have been like this for months.

I don't understand why it would be difficult for banks to toss homes already on their books to realtors to sell. It shouldn't be that hard, and god knows the realtors need the work.

I just don't understand what the thinking is behind sitting on a massive inventory of homes is. I don't think there is a conspiracy or collusion, but there must be some economic or policy reason for this.

[sfvrealestate]

Here in the SFV, we have been told that the banks are deliberately holding inventory back. Inventory is really short right now, so I'm hoping they'll release some soon.

However, I know from my own re-fi (five months in the works now) that the banks are overwhelmed as well.

[Ace]

long time listener,

How do you know the banks own those houses? Most of the houses in my neighborhood that look vacant are actually rentals. The house next to me with three feet high grass actually has about 47 people living in it.

If you are a neighborhood walker like me, get the zillow app for iPhone. It is awesome.

On a side note, even Caruso is starting to accept the market. His Americans condos in Glendale are now priced below builder cost and his apartments now offer 3 months free rent.

[Cal]

I agree with Ace. The number of REOs.. That is houses that the banks foreclosed on and are sitting on the sidelines.. is reatively small. The universe of homes with NTS filed but with the sale continually being postponed is much larger. And the number of homes with NOD filed is larger still... Then there are people like that NYT reporter who haven't made payments in many months and haven't yet been put in the foreclosure process.

There are many homes that are just abandoned by the owners and the banks haven't taken them back yet. People confuse the fact that they mailed in the keys with the fact that that isn't what absolves them from ownership of the home. Some of the people in Detroit are finding out the hard way that they still own that abandoned home (government fines for lack of maintenance).

"I know the banks are not mowing lawns."

I know for a fact this is untrue. Maybe some asset management companies might do this but it isn't universal. I personally know many REOs that are being mowed.

[Cyntdawg]

I thought the loan moratorium had something to do with the increase in NODs?

[TK Bruin]

Peter, once again, you are proving why you are the best RE Reporter around.

I don't think folks will really comprehend until it hits them, then they'll ask, "what happened?"

[Ace]

Cal, are you talking about REOs that are for sale or not for sale on the lawn mowing? Usually they will be mowed right before they hit the market.

A listing agent that I know just took a REO listing and went to check it out to list and found out that the tenant was still living there and the bank had not even started the eviction process. It makes me believe that the banks sometimes don't even send anyone to the property and are way overwhelmed. I know many people who have not paid a mortgage for 6 months or longer and have still not been foreclosed upon. On one short sale that I was negotiating, the owner had not paid for 14 or 15 months.