September foreclosure data

[Vikram C.]

Here's some data that landed on my desk this morning from foreclosureradar. The data is for California for September.

1. Notice of default has been flat from August and considerably lower than earlier in the year.

2. Foreclosures being canceled have gone down for the second month in a row despite the loan mod program.

3. The proportion of foreclosures being sold to investors has gone up for the sixth month in a row. Therefore, homes taken back by the bank as REO has declined.

4. The number of homes scheduled for trustee sales has increased dramatically over the last seven months and continued its upward path in September. It is not clear how this is going to end. Unless we see a major increase in loan mods and postponements, it looks like investors are going to have a pretty good supply of homes for the foreseeable future.

5. The actual foreclosure bidding data is interesting. Banks on average are bidding 33% less than the outstanding loan amount when they take back the property. And that is still 23% higher than the FMV of the property. When the property is sold to investors at the auction, the average bid amount is 20% below FMV. This could explain why investors still buy only a small proportion of foreclosure sales - banks are overpaying. Fortunately, the trend seems to favor investors as their share of sales is increasing.

6. Pretty much all the foreclosure sales have been on loans originated between 2005 and 2007. Since many properties are below their 2004 values, there's a good chance that those loans will also start going into foreclosure at an increasing rate.

If you want to see the original report, please check out foreclosureradar or PM me to the address in my signature.