is the title wave of reo's still coming?


#1

I keep hearing of a large increase of REO’S is still coming,what do you think?


#2

No, I think we will see an increase, but slow and steady, no wave. Depsite a huge back log of properties that should be in foreclosure, it is just too hard for the banks to do politically right now.


#3

Sean,
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I’ve seen in Sonoma County houses that were scheduled for auction but it was cancelled and a NOD refiled. Why is this? I’ve driven by one of these properties in particular and it is abandoned. They are definitely not working out the mortgage.
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Is this a tactic the banks are using to push out realized losses on their loan book?
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Also, does it take a while for ForeclosureRadar to update their REO data? In Sonoma County you show only 11 REO this month (down from about 100 per month from Mar-May).
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The property I mentioned above should have been moved into the REO category from Aution category… but instead is back in the NOD category.
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Thanks


#4

If the sale was cancelled and an NOD was refiled, then it is not REO. We only count something as REO once is sells at the foreclosure auction, and even then only if it goes back to the bank, rather than an investor. ? Our REO results are typically reported the same day as the sale occurs. The one exception would be the analyze tab, where we delay all results by 10 days. ? Not sure what you are looking at but I just did a search with county=Sonoma, Foreclsoure Type = Bank Owned (only), and current sale date = 6/1/09 to today, and got 167 results.


#5

WHY…why why why are they holding on to the inventory?? Do we have any definite answers?? If not, what are the theories?..plain bizarre.


#6

There are no legal holdups - none of the moratoriums affect the already scheduled auctions that are currently being postponed instead of sold. So clearly lenders are postponing foreclosure by “choice”.
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This shift started in earnest one week after Paulson announced that he would be seeking trouble asset relief for the banks. Which leads me to essentially two theories:
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  1. With that announcment lenders realized that they may either be able to dump assets on the taxpayer, or at least hold them on their books at inflated values helping them pass stress tests. Biggest problem with this theory is that most “banks” are really just servicers, with someone else holding the actual debt. Still though that doesn’t complete negate this theory.
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  2. I don’t think most people realize what a fundamental shift our banking system went through last September. I don’t think there is any bank president that at this point that doesn’t realize that he serves at the pleasure of the President. And we know that the President pulled the heads of the major banks into his office and admonished them to lend more and foreclose less.
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    Now that said, many will counter that it could be because the new Home Affordable loan mod program is working. And there may be some evidence to support that. Seems many are being put into trial loan mods before the foreclosure is cancelled - which would explain the high number of postponements. Maybe. Unfortunately these loan mods only kick the can down the road and insure we’ll be dealing with foreclosures for years to come as they typically only modify payment and leave homeowners stuck in a prison of debt.

#7

Awesome answer, thanks…I, too, was guessing that keeping inflated inventory on books had something to do with it- once they liquidate I bet the real damage versus the “paper” damage is a helluva lot worse…thanks, Sean. ?


#8

Sean, Thanks for the reply. The low REO numbers were indeed a mistake on my end. I was seaching with a “Notice Date” in the current month meaning I was only getting REO that had the NTS filed and were bought by the bank in the current month.
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As for the property I mentioned it is still listed as a “P”… pre-foreclosure… but it turns out there was a transfer of title to someone else on 6/12. Doesn’t this mean it was sold to a 3rd party and should be labled as such? Thanks…


#9

Our “Sold to 3rd” label only applies to properties sold to a third party on the court house steps. At this time we do not change foreclosure status based on non-foreclosure sales activity.