The Vegas Bubble News

http://www.calculatedriskblog.com/2009/09/occ-and-ots-foreclosures-delinquencies.html

Notice that foreclosure in process are increasing sharply, but completed foreclosures were only up slightly.

From the Office of the Comptroller of the Currency and the Office of Thrift Supervision: OCC and OTS Release Mortgage Metrics Report for Second Quarter 2009

This OCC and OTS Mortgage Metrics Report for the second quarter of 2009 provides performance data on first lien residential mortgages serviced by national banks and federally regulated thrifts. The report covers all types of first lien mortgages serviced by most of the industry’s largest mortgage servicers, whose loans make up approximately 64 percent of all mortgages outstanding in the United States. The report covers nearly 34 million loans totaling almost $6 trillion in principal balances and provides information on their performance through the end of the second quarter of 2009 (June 30, 2009).

The mortgage data reported for the second quarter of 2009 continued to reflect negative trends influenced by weakness in economic conditions including high unemployment and declining home prices in weak housing markets. As a result, the number of seriously delinquent mortgages and foreclosures in process continued to increase. However, a lull in newly initiated foreclosures occurred as servicers worked to implement the “Making Home Affordable” program during the second quarter.
…
The percentage of current and performing mortgages in the portfolio decreased by 1.4 percent from the previous quarter to 88.6 percent of all mortgages in the portfolio. All categories of delinquencies increased from the previous quarter, with serious delinquencies—loans 60 or more days past due and loans to delinquent bankrupt borrowers—reaching 5.3 percent of all mortgages in the portfolio, an increase of 11.5 percent from the previous quarter. Foreclosures in process reached 2.9 percent of all mortgages, a 16.2 percent increase.
…
In the second quarter, 15.2 percent of Payment Option ARMs were seriously delinquent, compared with 5.3 percent of all mortgages, and 10 percent were in the process of foreclosure, more than triple the 2.9 percent rate for all mortgages.
…
Mortgages guaranteed by the U.S. government, primarily through the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA), also showed higher delinquencies than the overall servicing portfolio. Serious delinquencies increased to 7.5 percent of all government guaranteed mortgages, up from 6.8 percent in the previous quarter.

Home prices down 32.6% from 2006 peak

By Inman News, Tuesday, September 29, 2009.

Inman News

Home prices rose for a third consecutive month in July, and the rate of annual decline continued to shrink for the sixth month in a row, according to the Standard & Poor’s/Case Shiller home price indices published today.

An index tracking prices in 20 metro areas showed prices increased in 18, by an average of 1.6 percent on a non-seasonally adjusted basis. Looking back a year, the 20-city composite index was down 13.3 percent — a smaller drop than the 15.4 percent decline seen in June.

The numbers “continue to support an indication of stabilization in national real estate values,” David Blitzer, chairman of the index committee at Standard & Poor’s, said in a statement.

But it remains to be seen whether the housing market will weather the possible expiration of a tax credit for first-time homebuyers in November, anticipated higher unemployment rates, and a possible increase in foreclosures, Blitzer said.

The 20-city composite index showed prices down 32.6 percent from their peak in second-quarter 2006, to levels last seen in fall 2003.

The five markets in the 20-city composite showing the strongest month-over month price increases were Minneapolis (4.6 percent), San Francisco (3.3 percent), Chicago (2.7 percent), San Diego (2.5 percent) and Atlanta (2.3 percent). Two markets saw month-over-month price declines: Las Vegas (-1.1 percent) and Seattle (-0.1 percent).

Looking back a year, all markets in the 20-city composite continue to show price depreciation, although six of those markets experienced only single-digit declines and three are nearing positive territory: Cleveland (-1.3 percent), Dallas (-1.6 percent) and Denver (-2.9 percent).

The five markets with the sharpest annual declines were Las Vegas (-31.4 percent), Phoenix (-28.5 percent), Detroit (-24.6 percent) Miami (-21.2 percent) and Tampa (-18.4 percent). The index showed prices in Las Vegas down 54.8 percent from their August 2006 peak

A disturbing article appeared yesterday in The LVRJ.  It is quite humbling on a large degree and describes the many heartaches and hardships that once hard working Las Vegan’s are now facing with the Economic meltdown.

http://www.lasvegassun.com/news/2009/sep/27/more-nevadans-will-need-help-economic-storm-worsen/

Much of the article details how:

  “Total of Nevadans on food stamps jumps 45 percent; state projects greater hardship, more in need of aid by 2013″

• Nearly one in five Nevadans will be on food stamps;

• Enrollment in Medicaid, the federal-state health insurance program for the poor, will increase nearly 25 percent, to more than 250,000;

• Enrollment in welfare will increase by one-third.

But I think a major , major untold story here – IS WHAT IS NOT BEING SAID – at least not YET. 

This Las Vegas Crash has wreaked havoc on many Marriages and destroyed many families in the process.

In the previous year or two , many of the questions I have been bombarded with have dealt with Friends and associates struggles with being  hugely upside down in their homes and possible solutions.

Lately , however , I am being beseiged with a much more horrifying storyline (I would like to take this minute to say that I am not trained in Human Psychology or a Psychologist and dont pretend to be one)

It would seem that our economic malaise has turned catastrophic to a shockingly large amount of the marriages I know. Not a day goes by when I do not hear about someone whose spouse decided to run and bail on their marriage and/or family.  Let me go over a very real situation and a common one that I recently heard:

Husband and Wife of 13 years with Four Kids. All Kids enrolled in a very expensive private school on the west side of town costing couple 60k per year.  Husband was a successful Mortgage broker. Wife doesnt work but was accustomed to the Upper Class social lifestyle and its benefits.  Bubble bursts and Husband is barely making ends meet. Then his mortgage company goes under. Faced with their first major economic challange in years-What does the wife do?  She splits and blames it all on him. Now the kids are going to have to face a life changing situation that they werent expecting.  Of course there is always more to the story and two sides to everything .

I am hearing of so many Marital Issues lately that I should have a sign over my desk stating “Going Rate for advice $100 per hour”.   Whether its a Communication issue, Mid-Life crisis, Drinking or gambling problem, Caught the Mrs. with the Mail man thing- there has been one underlying theme:

         The Current Financial crisis has exposed many unstable marriages that prosperity may have temporarily hid.

            Whatever the case -if the foundation was weak to begin with -the cracks will eventually show up.

I also have heard many heartwarming stories about how some families and Marriages have actually grown stronger when faced with similar adversity.  I am sure the local churches(regardless of denomination)must be getting a greatly increased attendance in the past year and have helped tremendously in these matters.

“A Blessing in disguise for some”- Many of these familes  now realize that monetary materialism doesn’t hold the high torch that it once did- There are more important values in life- Your family first.    

Hopefully many can use this current crisis to strengthen and learn from it.

    “He knows not his own strength that hath not met adversity.”  – Cesare Pavese

    “Adversity is the first path to truth”- Lord Byron

From :   www.thehousingbubbleblog.com 

“Chicago’s bungalows and brick Georgians are selling, but woe to the owner of a city condo. Phil Sammarco didn’t think it’d be so hard to sell his two-bedroom, two-bathroom condo in the city’s DePaul neighborhood when he put it on the market in March for $449,000. Now priced at $435,000, he has fielded — and rejected — a few low-ball offers and showed the unit to a lot of first-time buyers who have indicated they have a wealth of properties to look at. Now he’s thinking of turning it into a rental instead of lowering the price again.”

“A slowdown in the local housing market is reflected in assessed values for homes in Yakima County this year, the Yakima County Assessor’s Office said. .Certainly, King County has suffered from a bursting of the housing bubble. Stan Roe, assessment unit supervisor in the King County Assessor’s Office, said Monday market values in King County fell by an average of 15 percent this year.”

“‘I don’t think I’ve seen this big a drop before’ said Roe, who has worked for the King County Assessor’s Office for 19 years.”

“On a gut level, Meacham says, the packages of loans that Long Beach and WaMu began bundling and selling to investment banks didn’t make sense. But those loans held the lure of bigger profits for everyone, and the investment banks couldn’t seem to get enough of them. Meacham says he could see the housing crash coming, and sold his California home in 2006 at the peak of the market: ‘It didn’t take a financial genius to work out that blue-collar workers can’t be paying $3,000 a month for their houses,’ he says.”

“A. At one point average prices in Orange County hit US$750,000, roughly ten times the household income. This could not be supported and that’s when the drop occurred. But houses are affordable again: the average house price is about US$400,000. There were small 100-year-old units close to Chapman that were two room bungalows, maybe 900 square feet, going for US$900,000. Now they’re down to US$300,000, and still people look at them and say, ‘My goodness that should be no more than US $75,000.’ But in Orange County that’s affordable.”

“The real-estate bust that has pummeled San Diego’s downtown condo market and wreaked havoc in its outlying suburbs has hit its once-impregnable beach communities. Beachfront property has come down as much 30 percent in some areas from 2006 highs, with much greater savings possible on foreclosure properties or short sales.”

“Even the crown jewel, Coronado, hasn’t escaped the downturn. ‘Four years ago, you couldn’t find anything in Coronado for under $1 million,’ said Maureen Kerley, a real-estate agent who works in Coronado and Scottsdale. ‘Now, there are dozens.’”

“The Florida housing market is struggling because of a declining population, tight credit, high unemployment rates and a lengthening of the home-buying process, economists said. ‘I think we have a tougher path to get (out of the housing slump) than the nation as a whole,’ said Dr. Sean Snaith of the University of Central Florida’s Institute for Economic Competitiveness.”

“Tax credits won’t solve the main problem of limited credit, Snaith said. ‘Most people cannot get financing right now — that to me is the bigger problem,’ Snaith said.”

“‘On the one hand Australia is vulnerable to a collapse like the United States, where prices fell by a half during the sub-prime collapse … or to a long slow decline as in Japan since 1988,’ Dr Flood said.”

”’The country that promised limitless land, cheap housing and near universal home ownership to all comers now has the most expensive housing in the world amid very tight housing and land markets and little prospect of restoring the balance,’ Dr Flood said. ‘As long as the Government, the public and the media remain in denial, and self-congratulatory rhetoric continues that Australia has cleverly avoided the housing market correction it needed to have, there is little chance that matters will improve.’”

read the whole story here:

http://thehousingbubbleblog.com/?p=5653

http://blogs.wsj.com/developments/2009/09/25/shadow-market-part-ii-banks-avoid-acquiring-foreclosed-homes/

By James R. Hagerty

(This is the second installment of a series of posts on the shadow market.)

Banks appear to be resorting more often to a maneuver that helps them avoid acquiring property through foreclosure.

Before banks can acquire homes in foreclosure cases, there is a public auction, often at a county courthouse. These auctions are typically called trustee sales or sheriff sales. Normally, the lender or loan servicer (an entity that collects payments and handles administrative chores including foreclosure) makes a bid well above what investors are willing to pay for the home, and in those cases the bank ends up owning the property. It becomes part of the vast REO (real-estate owned) inventory that banks must sell off.

But sometimes the lender or loan servicer makes a bid low enough to tempt others to step in with a higher offer and win the auction. That has been happening more often lately in some parts of the country.

Sean O’Toole, chief executive officer of ForeclosureRadar.com, a research firm in California, estimates that in August 19% of homes sold in trustee sales in California went to investors rather than to a foreclosing lender, up from just 4% a year earlier.

In Adams County, Colo., part of the Denver metropolitan area, investors bought 16% of homes at trustee sales in the three months ended Aug. 31,  up from 5% a year earlier, according to Jon Goodman, a lawyer in Boulder who invests in foreclosed properties. Mr. Goodman says more investors are bidding at these auctions because of “a shortage of regular inventory that works for fix and flips.” In addition, he says, some lenders want to avoid the hassles of acquiring, repairing and selling too many houses.

Andrew Katakis, a veteran investor based in Northern California, who regularly buys homes at trustee sales, confirms that competition from other investors is getting tougher. Lately it has been common for 15 to 30 investors to show up for such sales, compared with three or four at typical sales a few years ago. “Prices are getting bid up,” he says. When he acquires homes at trustee sales, Mr. Katakis aims to resell them within three months, though that isn’t always possible.

Mr. Katakis believes banks have become less eager to acquire homes partly because of new legal restrictions on evictions of owners or tenants. For one thing, banks are reluctant to become landlords. The banks also must consider the costs of acquiring and then selling the homes, including commissions to real estate agents or auctioneers and the costs of renovation, maintenance, insurance and taxes. All of those might absorb 25% to 30% of the value of the property, Mr. Katakis says.

Most buyers at trustee sales are professional investors who aim to resell the properties as soon as possible. So the house probably will be up for resale whether the bank or the investor takes it. But Mr. Katakis argues that professional investors typically are more nimble and efficient than banks in reselling property. If so, that could help us clear through the foreclosure mess a bit faster.

When banks do take possession of homes, selling them can take a long time in some cases. MDA DataQuick, a research firm in La Jolla, Calif., looked at homes that were foreclosed between Oct. 1, 2007, and March 31, 2009, in various metropolitan areas. By late August of this year, about 8% of those homes still hadn’t been sold in California’s Sacramento County and 14% were unsold in San Bernardino County. In Clark County, Nevada, which includes Las Vegas, 13% still hadn’t been sold, and 15% were unsold in the Phoenix area.