Posted: 31 Mar 2011 03:30 AM PDT
Reports were released from First American CoreLogic and Lender Processing Services on the current state of shadow inventory and the mortgage market.
Irvine Home Address ... 33 ERICSON AISLE Irvine, CA 92620
How are people going to get along without their own ATM machines? Chasing free money induced many to pay peak prices, and now the lender has taken everything that they had and kicked them out to the street. I doubt they find the forbidden fruit of HELOC riches very satisfying under an ocean of debt.
by JON PRIOR -- Wednesday, March 30th, 2011, 10:02 am
And Shevy's home state of North Dakota has no shadow inventory at all.
LPS' Mortgage Monitor Report Shows Enormous Backlog of Foreclosures; Option ARM Foreclosure Rate Higher Than Subprime Foreclosures Ever Reached
March 28, 2011
A 22% cure rate is abysmal. Only by comparing it to the even more abysmal 2008 numbers makes 22 percent sound good. historically, cure rates are very high because borrowers used to have a rising market to sell into if they got into financial trouble. With the collapse of the Ponzi scheme, lenders were unwilling to extend credit, so borrowers couldn't Ponzi borrow to make payments. Since many borrowers were also underwater, they couldn't sell into a rising market, so they squat in comfort and wait for the bank to do something.
Let's walk through a few graphs to figure out what it all means.
The number of loans 90+ days delinquent loans continues to grow. We need to stop the increase and reduce the number to near zero. Historically, the percentage more than 90 days in arrears is very low.
To look at the chart above, one could mistakenly believe we are over the worst and delinquency rates are near historic norms. The truth is delinquencies are double historic norms, and distressed inventories are nearly eight times historic norms. How are prices supposed to go up in the face of that?
Further we are making very little progress on foreclosures. For every borrower entering foreclosure, three are delinquent. We are continuing to build shadow inventory.
Notice on the chart below that foreclosures kept pace with delinquencies until early 2008. The foreclosure statistics show a peak during that time when lenders realized they were crushing the housing market and embarked on amend-extend-pretend and created shadow inventory.
What are the prospects for curing these loans? Most bulls assume cure rates of 85% or better will mop up this mess. With less than a quarter of loans curing, foreclosure is the most likely outcome for shadow inventory even if cure rates continue to improve. Distressed inventory will be with us for a long time.
And, in case you needed any reminder from me, mortgage squatting is an national epidemic with nearly 30% of delinquent borrowers enjoying over two years of free living.
To make matters worse, the Option ARMs are beginning to reset and recast putting many borrowers into delinquency.
Foreclosures related to Option ARMs increased more than any other loan program over the last six months. We are only now entering the two-year period with the most resets. Look for the delinquency rates on these loans to continue to perform poorly.
We are going to see many more distressed sales over the next several years. I question whether lenders can maintain current pricing and liquidate inventories in a reasonable timeframe. Lenders will not want to hold this property forever, and as a society, we don't want them to. The only real question is how orderly will the liquidation be? How The Lending Cartel Disposes Their REO Will Determine the Market’s Fate.
Taking their lumps and moving on
Everyone who buy during a decline should know they may have to move and sell when the resale value is down. It is an avoidable financial loss. The owners of today's featured property paid $470,000 on 6/17/2008. They put 50% down. I have no idea why why they are selling. I do know that any losses come out of what was their down payment. Ouch.
Irvine House Address ... 33 ERICSON AISLE Irvine, CA 92620
Resale House Price ...... $419,000
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