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April 22, 2008

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Thanks for keeping us informed! On my way to work this morning, I was listening to NPR and there was a story about two entrepreneurs in Detroit who are snatching up houses they are calling "diamonds in the rough." They said they are buying nice, 3 BR houses for around $20k, touching them up with a non-profit org and then renting them out for international investors.

Does this sound reasonable? Will we be seeing more of this type of stuff around the country?

Really love the U tube and the blog, Mark. However, something that rarely gets mentioned in the press is that the Federal Reserve is a privately owned cartel and created this mess. It must be abolished.

The CEO of Coldwell Banker was just on CNBC stuttering his way through yet another softball interview by Maria. He basically sat their sputtering the same old nonsense about RE being local...pay no attention to the media and national numbers. After being asked what would help the market, his only answer was for the media to stop being so negative...LOL

I have some analysis to show the Existing home sales in context (vs. stuffs that went delinquent in CA over Q1 2008) Enjoy:

http://mtgspy.blogspot.com/2008/04/stunning-foreclosure-statistics-must.html

that coldwell interview was a joke. So is the Fed, Bruce. The Fed just through 300 mil American's under the buss to save 10 investment banks. The very same banks that started all this.

I got your message :D

I was comparing 113k foreclosures, versus 50% x 235k/quarter existing home sales rate as of March which came out to be 117k.

That's where the 97% came from.

That article was talking about notices of default. NOD's come first then 75% are not cured and turn into foreclosures that go to auction and if it does not sell then the bank buys it back as REO. Only 2-3% sell at auction. But you are right it is huge. You also need to add in the foreclosure auction stats for the month, which is less than the NOD's (x75%) meaning the problem is accelerating.

oh, ok - no i didn't add the current auction stats.

About the transfer rate, we did an analysis and show that all transfer rate from

30d going into 60d, 60d into 90d, 90d into FC is up significantly. What is surprising is the 30d late (missing 2 payments) is going up exponentially given that the economic shock is just beginning to happen.

I was unsure whether 60d to 90d can actually be 100%, until earlier this week. Perfect transition.

The real stat one should be looking at is the lag time from foreclosure to sale. We should be comparing foreclosures from say three or four months ago which should now be finally selling. What per cent would that be of total existing home sales today? I agree it is large and accelerating. There is also an expanding bubble of pending foreclosures as lenders try desperately to save some of these loans by dragging their feet on the inevitable. I don't think they will be able to do much good and we may see a tidal wave of foreclosures this summer as the dam bursts. Regards!

Toby - go to www.foreclosureradar.com and get on their free monthly forclosure report. You can last months there now. It has all those stats I believe. Or it did.

It is certainly clear that we are getting a bifurcation in the residential markets, arms-length at-market transactions versus REO (non-arms) sales by lender-sellers under duress. Question becomes at what point does the REO market become THE market? Right now, generally speaking, the arms-length sales still rule but non-arms are encroaching fast. This will have a huge bearing on how appraisals are performed & to remain in compliance with "market value" definitions & bank regulations. This was the big, nasty fight in the mid to late 1980's between the FHLB (Federal Home Loan Bank) & member banks regarding Regulation R41-C which essentially said use of REO sales as comparable sales in appraisals were not allowed. FHLB eventually capitulated on the issue because the REO market had finally become THE market by becoming a domineering influence. Some local markets around the country are already to that point. When this regulatory Pandora's Box finally opens wide, it will be "Katy, bar the door!". I am not looking forward to it after having been through it once before. This is going to get real ugly. NAR is going to have an even tougher time selling because the appraisals are not going to support value/price of the pending homes sales listed in MLS, unless the the listing agents (old-timers) really know what they're doing.

Mr. M - keep up the outstanding work!

good thoughts REappraiser

Excellent site & I loved your video on alt-a loans, very easy to understand.

I disagree with the comment:
"REO/Foreclosure sales have picked up in count due to the massive inventory banks hold. These homes sell for a 20-60% discount"

These homes sell at market value, lenders are pressed for time & they "quick price" the property but it is market value.. it may set the market but it is not a discount at least not in my Los Angeles market, just competitive pricing.

I do not ordinarily leave comments on posts that I read, but let me tell you, you have a very nice writing style and about your post it is superb to see you here.
You wrote very clearly to understand.

You raise some good points

Thanks

I do not believe this

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