Auction investors see fewer deals, better margins
Discovery Bay, CA, July 13, 2010 - ForeclosureRadar (www.foreclosureradar.com), the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for for June 2010. Foreclosure activity was mixed in June after being down across the
board in May. Filing of new foreclosure notices rose, while foreclosure sales dropped. The number of
foreclosure sales that were cancelled hit an all time record in June, but the increase was primarily driven by
just one lender JP Morgan Chase, and it's acquisitions including Washington Mutual. Although the number
of properties purchased by 3rd parties at auction dropped significantly, they purchased nearly the same
percentage of the total properties sold, and at a better discount to market value then we've seen in months.
"Historically it is very unusual to have more Notice of Trustee Sale filings than Notices of Default" says Sean
O'Toole, Founder and CEO of ForeclosureRadar.com. "But with skyrocketing cancellations and the
possibility of failing loan modifications, this will be increasingly common, as lenders are only required to file
a Notice of Trustee Sale to restart the foreclosure process."
Foreclosure Filings
Notice of Default |
| Prior Month |
Prior Year |
| 6.74% |
-45.24% |
Notice of Trustee Sale |
| Prior Month |
Prior Year |
| 21.93% |
11.56% |
Notice of Default filings are the first step in the foreclosure process. Notice of Trustee Sale filings set the
date and time of auction and serve as the homeowner's final notice before sale.
| 9-Jan |
9-Feb |
9-Mar |
9-Apr |
9-May |
9-Jun |
9-Jul |
9-Aug |
9-Sep |
9-Oct |
9-Nov |
9-Dec |
10-Jan |
10-Feb |
10-Mar |
10-Apr |
10-May |
10-Jun |
| 40580 | 49799 | 58623 | 47337 | 42203 | 47093 | 47530 | 37063 | 38175 | 36534 | 30478 | 27200 | 25904 | 31309 | 33139 | 28901 | 24162 | 25790 |
| 24890 | 21147 | 34559 | 31556 | 43355 | 30711 | 40757 | 34224 | 33112 | 38558 | 28170 | 28475 | 27220 | 28501 | 34071 | 31599 | 28098 | 34261 |
Foreclosure Outcomes
Cancellations |
| Prior Month |
Prior Year |
| 27.09%% |
153.19% |
Back to Bank (REO) |
| Prior Month |
Prior Year |
| -23.73% |
-46.71% |
Sold to 3rd Party |
| Prior Month |
Prior Year |
| -26.24% |
10.73% |
After the filing of a Notice of Trustee Sale, there are only three possible outcomes. First, the sale can be
Cancelled for reasons that include a successful loan modification or short sale, a filing error, or a legal
requirement to re-file the notice after extended postponements. Alternatively, if the property is taken to sale,
the Bank will place the opening bid. If a 3rd party, typically an investor, bids more than the bank's opening
bid, the property will be Sold to 3rd Party; if not, it will go Back to Bank and become part of that bank's REO
inventory.
| 9-Jan |
9-Feb |
9-Mar |
9-Apr |
9-May |
9-Jun |
9-Jul |
9-Aug |
9-Sep |
9-Oct |
9-Nov |
9-Dec |
10-Jan |
10-Feb |
10-Mar |
10-Apr |
10-May |
10-Jun |
| 6717 | 6904 | 6352 | 6707 | 7162 | 8674 | 10818 | 10004 | 8660 | 8757 | 10487 | 13287 | 13859 | 13806 | 16520 | 18437 | 17280 | 21962 |
| 14533 | 16419 | 9201 | 12145 | 15864 | 19713 | 14632 | 14367 | 13155 | 16018 | 14165 | 12471 | 13943 | 11983 | 15365 | 14615 | 13775 | 10506 |
| 893 | 1266 | 1094 | 1653 | 2305 | 2694 | 2691 | 3285 | 3411 | 3960 | 3683 | 2629 | 3707 | 3631 | 4031 | 4336 | 4044 | 2983 |
Foreclosure Inventories
Preforeclosure |
| Prior Month |
Prior Year |
| 8.86% |
-15.69% |
Scheduled for Sale |
| Prior Month |
Prior Year |
| -0.99% |
15.74% |
Bank Owned (REO) |
| Prior Month |
Prior Year |
| -4.89% |
-19.79% |
Preforeclosure inventory is an estimate of the number of properties that have had a Notice of Default filed
against the property, but have not yet been Scheduled for Sale. The Scheduled for Sale inventory indicates
those properties that have had a Notice of Trustee Sale filed, but have not yet been sold or had the sale
cancelled. The Bank Owned (REO) inventory indicates the number of properties that have been sold Back to
Bank at the trustee sale, and which the bank has not yet resold to another party.
| 9-Jan |
9-Feb |
9-Mar |
9-Apr |
9-May |
9-Jun |
9-Jul |
9-Aug |
9-Sep |
9-Oct |
9-Nov |
9-Dec |
10-Jan |
10-Feb |
10-Mar |
10-Apr |
10-May |
10-Jun |
| 130550 | 159215 | 179412 | 185603 | 174243 | 186060 | 175283 | 171841 | 169860 | 154905 | 157288 | 146941 | 152322 | 140126 | 157768 | 152770 | 144105 | 156874 |
| 69374 | 64177 | 82390 | 92002 | 111824 | 113141 | 124874 | 131300 | 140382 | 149456 | 151573 | 147570 | 145977 | 145260 | 141669 | 137741 | 132269 | 130953 |
| 137331 | 135488 | 122901 | 112792 | 107762 | 106139 | 100206 | 98829 | 95479 | 93926 | 93595 | 89119 | 90551 | 89529 | 90065 | 89998 | 89513 | 85135 |
Foreclosure Discounting
Foreclosure discounting compares the winning Bid Amount of properties sold at trustee sale to both the
outstanding Loan Amount, and the current Market Value. Banks place an opening bid for each property, and
if a 3rd Party does not make a higher bid the property will be sold Back to Bank (REO) for the opening bid
amount. While 3rd Party bids are higher than the opening bid, properties Sold to 3rd Parties typically have
lower opening bids to start with and therefore deeper discounts to both Loan Amount and Market Value.
Foreclosure Timeframes
Time to Foreclosure |
| Prior Month |
Prior Year |
| -0.43% |
34.93% |
Time to Resell - Bank |
| Prior Month |
Prior Year |
| 5.95% |
9.43% |
Time to Resell - 3rd |
| Prior Month |
Prior Year |
| 4.29% |
1.19% |
Time to Foreclose is the total time from the filing of the Notice of Default to the sale of the property at
trustee sale, and reflects those properties sold in the month indicated. Time to Resell reflects how long it
takes banks and 3rd parties to resell the properties they take back or purchase at trustee sale.
| 9-Jan |
9-Feb |
9-Mar |
9-Apr |
9-May |
9-Jun |
9-Jul |
9-Aug |
9-Sep |
9-Oct |
9-Nov |
9-Dec |
10-Jan |
10-Feb |
10-Mar |
10-Apr |
10-May |
10-Jun |
| 192 | 198 | 176 | 171 | 180 | 173 | 187 | 185 | 191 | 195 | 198 | 222 | 229 | 224 | 225 | 239 | 235 | 234 |
| 218 | 223 | 231 | 234 | 240 | 244 | 238 | 228 | 220 | 219 | 220 | 224 | 224 | 224 | 232 | 247 | 252 | 267 |
| 193 | 186 | 214 | 196 | 183 | 168 | 146 | 147 | 141 | 131 | 133 | 141 | 149 | 150 | 153 | 162 | 163 | 170 |
Foreclosure Activity By County
| |
Notice of Default |
Notice of Trustee Sale |
Back to Bank (REO) |
Sold to
3rd Party |
Comments
RE: The number of foreclosure sales that were cancelled hit an all time record in June, but the increase was primarily driven by just one lender JP Morgan Chase, and it's acquisitions including Washington Mutual.
Could you provide the reason for these cancellations, or even a guess? Pending foreclosure-related legislation in CA would appear to impact only future filings. It’s hard to believe 10,506 CA sales were canceled in June 2010 because that number of borrowers were approved for loan modifications/trials or that number of short sale contracts were submitted in June. Ever-mounting fraud suits filed throughout the US regarding Chase/WAMU loans don’t only impact CA.
However, the April 2010 Senate report did indicate an extensive level of mortgage origination fraud specifically in CA:
In some cases, sales associates in Washington Mutual offices in California fabricated loan documents, cutting and pasting false names on borrowers' bank statements. The company's own investigation in 2005, three years before the bank collapsed, found that two top-producing offices -- in Downey and Montebello, Calif. -- had levels of fraud exceeding 58 percent and 83 percent of the loans. Employees violated the bank's policies on verifying borrowers' qualifications and reviewing loans.
From and for more:
http://www.washingtonpost.com/wp-dyn/content/article/2010/04/12/AR201004...
I’d very much appreciate learning the reason(s) for the canceled sales. Could the auction machine just be backlogged requiring short term relief?
Could the legislature perhaps have required an emergency halt to further homelessness until this Chase/WAMU Plaintiff or its agents does more than record a newly-minted yet backdated document prepared and signed by Plaintiff’s current agent(s) as Grantor to Plaintiff as Grantee which purports to establish Plaintiff’s ownership interest in the loan / deed of trust, where in many cases the terms of the documents governing the WAMU-related securitizations that supposedly held the interest were violated, and in any event those securitizations were closed after the loans were paid off (usually 10 to 30 times over) from other (ins. - derivatives, hedges) sources LONG AGO and the loan went back to the originator for repackaging/resale? But no, I suppose that’s too much to hope for… But maybe someday the borrower will be able to learn the name of the junk debt buyer who purchased the new securitized version of their defaulted loan after the first securitization was closed but before the current foreclosure suit was filed.
I deeply appreciate your website – thank you very much for all your work, this is an excellent resource. I only wish there were a nationwide version covering each state.
:)
We have been trying to determine the reason for the increase in cancellations especially given the increase in the number of delinquent loans (over 30 days late). We can assume that a certain number can be attributed to pending modifications and short sales but we also have numerous examples of homeowners and realtors that have contacted us because they are frustrated that the sale was cancelled and they do not have any pending mod or short sale.
We have seen a shift over the last couple of months where homeowners want this process to be over and they want to start to rebuild and yet the bank has cancelled a pending sale or has failed to start the foreclosure process even after over a year of missed payments.
We posed this question regarding the increase in cancellations to several asset managers and other REO professionals. The best answer we received was this:
"My thoughts are that this is for the most part due to HAFA. Now that most servicers have systems in place to administer the program they are removing delinquent loans from the foreclosure pipeline to allow a reasonable short sale time period. Predictably (also my opinion) the period would be expiring just AFTER the November elections so there would be less political blowback as those properties that don't conclude with a successful short sale are taken to Foreclosure and ultimately, REO"
This could very well be just balance sheet management on behalf of the lender. Sean O'Toole, the Founder of ForeclosureRadar, calls this "extend and pretend".
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