From Bloomberg this morning: [Thanks G!]
April 15 (Bloomberg) — U.S. foreclosure filings jumped 57 percent and bank repossessions more than doubled in March from a year earlier as adjustable mortgages increased and more owners gave up their homes to lenders.
More than 234,000 properties were in some stage of foreclosure, or one in every 538 U.S. households, Irvine, California-based RealtyTrac Inc., a seller of default data, said today in a statement. Nevada, California and Florida had the highest foreclosure rates. Filings rose 5 percent from February.
About $460 billion of adjustable-rate loans are scheduled to reset this year, according to New York-based analysts at Citigroup Inc. Auction notices rose 32 percent from a year ago, a sign that more defaulting homeowners are “simply walking away and deeding their properties back to the foreclosing lender” rather than letting the home be auctioned, RealtyTrac Chief Executive Officer James Saccacio said in the statement.
“We’re not near the bottom of this at all,” said Kenneth Rosen, chairman of Rosen Real Estate Securities LLC, a hedge fund in Berkeley, California and chairman of the Fisher Center for Real Estate at the University of California at Berkeley. “The foreclosure process will accelerate throughout the year.”
Housing bulls like to point out that as a percentage of total borrowers, owners in foreclosure are only a small percentage. However, as a percentage of homes that are for sale, foreclosures in many markets make up a significant share. According to the Wall Street Journal last month:
In some major markets, including Las Vegas and San Diego, foreclosure-related sales have accounted for more than 40% of all sales in recent months.
Homes for sale are what drive the direction of home values. Consequently, a high percentages of foreclosed properties an area can devastate home values- and as the prices drop, the foreclosures continue to increase.
Rosen is right- the bottom is nowhere in sight.
“The keys are in the mail”
Good. When enough people get fed up and walk away, maybe THEN lenders will be motivated to try to fix THEIR problem (rewrite the loans, reduce the principal, eat some losses) WITHOUT a big, fat taxpayer bailout.
Sing it with me, people … “Jingle mail, jingle mail, jingle all the way!”
Very sad. I hate to see people lose their homes, and I worry we will tread into those that made more reasonable purchases–not peak price with creative loans–as we continue downward.
I keep hearing the same story-lenders are not flexible. We see this in credit cards, putting a squeeze on already drained people, like they can pay 28-30% when 18% wasn’t working for them.
Some may deserve what they get, wanting a 5 bedroom, needing a 3, ability to afford a 3, but purchased a 6 bedroom. More reasonable buyers will get hurt, this is the sad part.
The lesson here is personal and financial responsibility.This lesson is for everyone!!!!From the top to the bottom.Integrity has become a buzz word.This mess has just begun.We all will feel the pain on different levels.Hopefully our children will learn from our mistakes.
OutOfVegas:
>>I hate to see people lose their homes
Me too! Thing is, since people being foreclosed on didn’t own the home, it wasn’t their home to begin with and they aren’t losing “their” homes.
If these people had money to pay rent – I mean “the mortgage” to the bank, they have money to rent somewhere nice when they have to move out of the home they never owned in the first place.
Meanwhile, maybe just maybe some executive in a bank’s ivory tower somewhere is looking over his industry’s losses and getting the idea that banks shouldn’t have greedily/happily bankrolled the housing bubble in the first place.
MikeC:
“maybe just maybe some executive in a bank’s ivory tower somewhere is looking over his industry’s losses and getting the idea that banks shouldn’t have greedily/happily bankrolled the housing bubble in the first place.”
I doubt that. They’re probably just looking for the next way to get another buck.
Yeah, they’re looking to get the government to cover their losses and more so they can move on to the next bubble.
More reasonable buyers will get hurt
I disagree (in the majority case). Anybody who bought reasonably will be able to afford their payments, whether the “market price” of their home is $1 or a million.
This is all leading towards chaos in our society. Banks/Lenders are already overwhelmed by the magnitude of the situation and can’t effectively forclose. People who can’t pay due to lost jobs and other credit problems are sensing this and will stay put daring anyone to throw them out while they live rent free. Others who can pay their mortgages will sense this and do the same cause the other guys are getting away with it. House flippers are just jingle mailing the keys back. The tax payers will become the defacto holder of the bag through bail-outs. The question in my mind is how draconian will the needed measures be to get things under control or will it just devolve into total absurdity? I’m in the absurdist camp. Interesting times. Yes Igor it’s going to explode.
Sandman:
I certainly do not claim to be an expert, but I personally question the depth of future damage. This being a wave of fallout that I perceive to be founded primarily in the housing market. Fallout coming from extended concerns with expanded debt and defaults on essential and non-essential items like motorcycles, boats, credit cards, home improvement, student loans, and so on. A wave that could continue to impact jobs and a wave that could be difficult to contain.
This is a personal concern based upon what I perceive. Although I have an advanced education in finance, my world is one of beating out China and Mexico based upon quick action from drawing board to production to delivery on narrow margins while trying to keep everyone employed.
I am the first to admit that I am not an expert and my views are usually based on some personal level of reason. And at this point, I can’t build a wall in my mind that significantly isolates more reasonable buyers from the direct and collateral damage that I view as founded in the unreasonable portion of the housing market.