Readers may recall that the number of San Diego homes entering the foreclosure process plummeted in September. This drop was coincident with a new state law mandating an extra 30 days before foreclosure could be initiated.
Yet 30 days have come and gone a couple times over and foreclosures have not started back up again. It seems that there is something else causing a downshift in in foreclosure activity. The manifold bailout attempts would be my guess.
The question is whether the assorted bailouts have merely caused a temporary slowdown in foreclosure processing or whether they are actually inducing troubled mortgages to be worked out in a sustainable manner. I don’t know the answer to that question, but I suspect that it’s a little bit of both for the time being.
(written for voiceofsandiego.org)
I thought there was more work
I thought there was more work that had to be done by the banks as a result of the new law. 30 days extra, but also some additional work to show that an attempt was made by the bank to negotiate with the home owner. Getting these processes in place would account for the extra time, but as the banks do get systems and processes in place for addressing the law, the NODs should go back up again. I’m going to have to do some digging into this.
Edit: Okay, I found the bill, and this part of the bill is what I was discussing:
“The bill would require contact with the borrower, as defined, in order to
assess the borrower’s financial situation and explore options for the
borrower to avoid foreclosure. The bill would require the mortgagee,
beneficiary, or authorized agent to advise the borrower that he or
she has the right to request a subsequent meeting within 14 days, and
to provide the borrower the toll-free telephone number made
available by the United States Department of Housing and Urban
Development (HUD) to find a HUD-certified housing counseling agency.
The bill would require the notice of default to include a specified
declaration from the mortgagee, beneficiary, or authorized agent
regarding its contact with the borrower or that the borrower has
surrendered the property. If a notice of default had already been
filed prior to the enactment of this act, the bill would instead
require the mortgagee, trustee, beneficiary, or authorized agent, as
part of the notice of sale, to include a specified declaration
regarding contact with the borrower. ”
The full bill can be found here:
http://info.sen.ca.gov/pub/07-08/bill/sen/sb_1101-1150/sb_1137_bill_20080708_chaptered.html
Great point rockemsock.
You
Great point rockemsock.
You could be right, this could be all the state thing. I just have this feeling that all the intervention at the Fed level is, if nothing else, confusing things enough to get banks to hold off. This is a sentiment that’s been expressed by SD R and I think we are in the same camp about the visible fist of govt having some effect (even if we aren’t sure what it is).
It’s just a hunch though. If you are right we will know pretty soon I think.
rich
Fannie Mae and Freddie Mac’s
Fannie Mae and Freddie Mac’s foreclosure moratorium is set expire in January.
Whatever the cause of the lull it’s safe to say it’s artificial and will only prolong the correction.
From the anecdotal evidence
From the anecdotal evidence that everyone loves around here so much (i.e. talking to my REO Guy compadres) the floodgates should open quite a bit in early 2009.
Slow down or not, can San
Slow down or not, can San Diego handle a thousand plus a month?
I am hoping that what
I am hoping that what sdrealtor said was correct that we will see the gates open again in early or mid 2009. It will be quite interesting to see what happens with the mandate for the GSEs to purchase billions in bad paper per month.
Again, I am really disappointed at the amount of federal intervention.
Hopefully we will see the floodgates open but something tells me that with a stagnant economy and rising unemployment that we are pretty darn naive if we think that the president elect and the congress do not have a MAJOR plan that they will enact to counter the foreclosures.
Anyone care to hazard a guess at what will be in store for us?
SD Realtor wrote:
Hopefully
[quote=SD Realtor]
Hopefully we will see the floodgates open but something tells me that with a stagnant economy and rising unemployment that we are pretty darn naive if we think that the president elect and the congress do not have a MAJOR plan that they will enact to counter the foreclosures.
Anyone care to hazard a guess at what will be in store for us? [/quote]
If there were a major plan in the works, it would be open to public discussion purely for the sake of restoring confidence. The central problem is a flight to cash (long bond below 3%!) and anything to restore willingness to take on risk would help the situation. The Fed and Treasury are well aware of this: Consider how public Paulson has been with his moves, which have been aired well before they are completed.
Bailouts and foreclosure prevention will be concentrated in lower priced housing. The public will be unsympathetic to owners of million dollar houses.
Perhaps a plan exists for
Perhaps a plan exists for direct lending by the Fed (circumventing the banks) in an attempt to get housing moving and also to continue the “battle” against deflation.
North15 wrote:Perhaps a plan
[quote=North15]Perhaps a plan exists for direct lending by the Fed (circumventing the banks) in an attempt to get housing moving and also to continue the “battle” against deflation.[/quote]
As already partly underway by the Fed, there will be direct purchases of agency debt and MBS. That is about as direct of lending as anyone need get to.
I am not sure Fearful. I
I am not sure Fearful. I don’t think the new president wants to come right out with a large announcement that will be open for public discussion. No matter what comes out I do not see it turning the market and moreover it will just add a couple more trillion to our kids debt load.
SD Realtor wrote:I am not
[quote=SD Realtor]I am not sure Fearful. I don’t think the new president wants to come right out with a large announcement that will be open for public discussion. No matter what comes out I do not see it turning the market and moreover it will just add a couple more trillion to our kids debt load. [/quote]
While I am not as averse as some here regarding government intervention, I do agree with SD that we may be looking at a large government market intervention just around the bend.
My suspicion is that it will look something like what Sheila Bair has been floating for some time.
That is, massive re-works ending in payments of 31-35% of income.
(Honestly, if you can’t afford that amount, you can’t even afford rent usually.)
Lets bear in mind that much of the standardization of our current mortgage procurement process has to do with underwriting that is oriented around the marketability of paper to gse’s. I think we will see some similar type of standardization for re-works and short sales. Perhaps this will take the form of some standard application with standardized supporting documentation. That would go a long way toward reducing the number of properties going into default. Probably there will be incentives for consumers (like shortening gse lending moratoria on trust deeds to those doing short sales by the government’s rules) as well as incentives for industry (like making capital injection contingent on playing ball). Personally, I think it would be about 18 months overdue.
Anyone feel that the low
Anyone feel that the low interest rates may be contributing to the lower foreclosure numbers, given fewer nasty resets of ARMs tied to LIBOR and Prime rates?
http://globaleconomicanalysis.blogspot.com/2008/12/arms-reset-problem-vanishes-into-thin.html