L.A. foreclosures still piling up

Los Angeles County mortgage delinquencies and foreclosures in April continued to outpace levels of the previous year, according to data today from First American Core Logic.

In April, 7.16% of Los Angeles County mortgages were in default, up from 4.67% in April 2008, according to First American, which reports on foreclosures as a percentage of active mortgages, rather than as a share of total households as some other firms do.

Defaults are the first stage in foreclosure, occurring when a borrower has missed multiple payments. Bank repossessions, the final step, were also up, to 1.4% of active mortgages in April, from 0.95% in April 2008.

From May 2008 to April 2009, L.A. County averaged 361 foreclosure filings a day. That was up from an average of 20 per day the previous 12 months.

That means a whole lot of distressed inventory is on its way to being resold on the open market, putting more downward pressure on home prices.

-- Peter Y. Hong

Comments

[Drew]

You make an assumption that "a whole lot of distressed inventory is on its way to being resold on the open market."

For whatever reason, many foreclosed homes have not yet hit "the open market." Whether they are being held by banks, either vacant or being rented back to the former owners, or sold in bulk to investors/speculators to be rented of flipped, these properties are not on the "open market."

Since many foreclosed properties have not been placed for sale on the "open market," there is little to suggest that adding even more properties into foreclosure status will induce them to be placed for sale on the "open market."

[mar vista pete]

Here's another way of looking at the same stats: The foreclosure wave has the temporary impact of artificially INCREASING disposable income in L.A. Huh?

Think about it: Seven percent of the people with mortgages are not paying their mortgages. They're not paying the single biggest bill most families have. Their disposable income is temporarily and artificially inflated because they are getting their housing for free, if only for six months or so. It could be these folks are saving money, knowing that they'll need it for deposit on a rental home -- or even downpayment on a purchased home. But I doubt it.

[esp4p3]

Drew, CA has a foreclosure moratorium in effect from June through August. This is why the foreclosures are not hitting the market. Just wait until September!

[Laker]

Peter (Viles), You are correct. I have been pointing that out many times and was shut by Cal sometimes...
I know of people personally that are not paying their mortgage because:
1)waiting to get foreclosed
2)waiting to get loan modified
3)waiting to sell
4)waiting to do a real or fake short sell...
For those that are extended and have a problem in paying their mortgage, you probably have about half of their income as mortgage payment or maybe even more.
For those not to pay couple of months rent, will double their income de facto not artificially.
One specific house that i was following had the "owner" not paying mortgage and taxes for 15 months...until evicted. But 15 months about $5000 a month. According to my math - That is $75,000. That is a down payment on FHA Loan plus cash to buy a new SUV and a jet ski.
So please....those people are rock and rolling today! The tax payer are left to fill the banks and wall street pockets.

[JohnnyB1]

With the amount of ARMS originated in 2004-07 due to reset between now and 2012, this situation could get much worse. The bottom line is that we are looking at another wave of prime/Alt-A mortgages that are defaulting at a faster rate than the subprime did.

[jag]

I agree with Laker. The irresponsible people who bought a home that they couldn't afford are now taking advantage of loan mods, fake short sales, or purposely not making their payments to live rent free for over year. Once again responsible people that live within their means are bailings out these irresponsible folks. Thanks a lot Obama.

[Sean]

Peter,

I follow a whole bunch of properties in various stages of foreclosure, and it does seem that: (1) even though the notices of default are filed, it takes months and months before a notice of trustee sale is filed; and (2) even after a NTS is filed, the auction date keeps getting continued over, and over, and over, to the point where on many properties, no auction takes place within a year of the NOD. What is the real story on why the noteholders or servicers are not forcing these properties to auction? I'm aware of the speculation about lender overload, servicer incompetence, fear of flooding the market (i.e. conspiracy to keep prices up), fear of booking losses or marking to market, alleged moratoriums, statutorily imposed delays, etc., but would appreciate some investigative reporting based on facts, not speculation. Thank you.

[A different Peter]

I don't know what the fuss is all about. An increase in the number of foreclosed homes is likely to put downward pressure on future home prices. That's all he is saying. He didn't say it was going to happen within a certain period. Relax and look at the bigger picture people.

[Ace]

esp4sp,

Can you provide a link to that foreclosure moratorium? I know that Arnold was talking about passing a 120 moratorium starting June 15th but I cannot find anything about it. Maybe my Google isn't working?

In the meantime, I have seen a few new foreclosures in my neighborhood in the last 2 weeks. The banks starting foreclosing immediately after the last moratorium ended.

[Jazzzman]

"From May 2008 to April 2009, L.A. County averaged 361 foreclosure filings a day. That was up from an average of 20 per day the previous 12 months."

Som'n odd with those #'s. That's a 1600% increase ...not from 4-something to 7-something.

Also the idea that somebody's gonna "buy" all the reo's on the books PLUS the ones on the way is ridiculous - WHO's gonna buy them?

The only possible scenario: the gov't ends up with 30-40% of the homes in LA county - more in San Berdo and Riverside. They'll need to rent them out. If you said to the same families wh are losing them in foreclosure, go to the head of the class. The catch: vote democrat.