In March, the number of mortgages that are delinquent or in foreclosure fell below 5 million for the first time since 2008. From Nick Timiraos at the Wall Street Journal Developments blog, writing on a Lender Processing Services report:
- 1.69 million mortgage in foreclosure process in March, down 20% yearly
- 3.4% of US mortgage in foreclosure in March, down 4.2% yearly
- 3.31 million loans behind on payments in March
- 1.47 million delinquent loans had missed at least three payments
- 6.6% of all borrowers in some stage of delinquency (excluding foreclosure) down 3% yearly
Three main factors have helped the decline in foreclosure activity. For one, the market worked through a large portion of distressed properties, and the borrowers that remain are more committed to keeping their homes.
For another, lenders are increasingly turning to short sales, principle reductions, and loan modifications to avoid the costly foreclosure process.
Lastly, increases in home prices are helping more borrowers come out from underwater, thus giving them incentive to stay in their home and continue mortgage payments.
The stock market is on a historic bull run. The Dow Jones Industrial Average (DOW) is on pace for its 10th-consecutive positive close, and it has already destroyed its pre-bull run high of 14,164.53. Mid-day trading has brought the Dow up to 14,509.34 (+54.06).
Imagine that over the period of several years, the $200,000 in your bank account dropped in value to $130,000. When you went to the bank to withdraw the money, the teller says “sorry, your money is only worth $130,000.” This is exactly what the post-bubble real estate market did to home values.
There were 2 million fewer underwater mortgages in the United States in 2012, according to the Zillow Negative Equity Report. The fourth quarter saw the percentage of total mortgages that were underwater fall to 27.5%, down from 28.2%. Read more
San Luis Obispo County foreclosure activity drops by 50 percent to begin new year as home prices rise
San Luis Obispo County foreclosure activity fell 50 percent in January 2013 from the previous month, reflection a California state-wide decline in filings after the “Homeowners Bill of Rights” legislation went into effect to begin the new year.
The low point of the post-bubble real estate market came in March 2009, when REO saturation reached 41.0%. That astonishing number holds the key towards understanding just how far we have come towards recovery in 2012/13.
The most recent ClearCapital Home Data Index (HDI) market report shows that REO saturation in January 2013 was at 18.4%. The West region REO saturation level reached 52.5% at peak and has now fell to 17.2%.
Home prices registered a 5.4% year-over-year improvement, including 0.9% over the past “rolling quarter.”
The prevalence of REO and short sale properties has a strong correlation with real estate home price trends. These “distressed” properties are often steeply discounted, which has contributed to the decline in home values we saw in the post-bubble market. These home values recover as demand stabilizes, foreclosure activity retreats, and REO properties are purchased (lately, by investors).
Dow close: 13,190.84 (-120.88)
S&P 500 close: 1,430.15 (-13.54)
Nasdaq close: 3,021.01 (+6.03)
10-year Treasury close: 1.77 percent (-0.04 percent)
We published mortgage rates on December 20, see the updates rates HERE. Movement was mixed among different programs, but primarily rates jumped.
In the news…
Stocks tumble 1% as hopes for ‘Cliff’ deal dim. || Justin Menza, CNBC
Foreclosure funds slow to get to homeowners. || Julie Schmit, USA Today
Last minute shopping deals! || Emily Jane Fox, CNN Money
Sales of distressed properties (foreclosures) has helped the real estate market pick up steam over the past year. Now, as 2012 draws to a close, normal sales appear ready to take over. Should this trend continue, we are looking at higher home values and a stronger real estate market.
Dow close: 13,170.72 (-74.73)
S&P 500 close: 1,419.45 (-9.03)
Nasdaq close: 2,992.16 (-21.65)
10-year Treasury close: 1.74 percent (+0.02 percent)
We published mortgage rates today, see the updates rates HERE. Movement was mixed among different programs.
In the news…
New households in 2012 are almost entirely renting houses rather than buying them. This is further evidence that first-time buyers are getting priced out of the market. || Diana Olick Facebook
Foreclosure activity is down for the year, but bank repossessions jumped in November as the backlog of foreclosures work their way through the system. || Diana Olick, CNBC
Foreclosure activity in 2012 has been 69 percent lower than expected according to one forecast. || Rylan Stewart, Central Coast Lending
Jobless claims dropped more than expected. This is the fourth straight week of declines after the Sandy-induced spike. || Rylan Stewart, Central Coast Lending
Is the Federal Housing Agency engaging in risky loan activity? A recent analysis suggests that the FHA loans are more likely to default. || Gretchen Morgenson, New York Times
Foreclosure volume is about two-thirds lower than expected in 2012, according to an article in the December 10, 2012 issue of Bloomberg Magazine. From the article titled “The Foreclosure Wave That Wasn’t“: Read more