Now that FASB has relaxed mark to market accounting (April 2nd), it makes sense that the banks would want to keep the assets on their books, even if they are not performing.
By holding off on foreclosures, they’re able to bury their balance sheet problems for a later date.
The mark to market rules do The mark to market rules do not concern marking the value of the loan to the market value of the collateral (in this case the home). They concern marking the value of the loan to what the loan itself (or its securitized end-product) is currently trading at in arms length transactions.
Is it unreasonable to Is it unreasonable to contemplate the large surge,record and near record surge, in NOD in the last two months as having a latency component from the notification delays that were imposed. I see the potential for the averaging of the artificial NOD trough and the peak being more realistic. Valid or not the exercise tends to cure the divergence in the trend with NOT….so I ask the experts?
There is an easy way to find There is an easy way to find out if those homes are really in any kind of limbo.
Notices of default rebounded in December. By now December NODs had more than enough time to mature into NTS. Pick a bunch of NODs dated mid-December at random and check their status.
I’ll do that for NODs dated 12/15/2008 and let you know.
Okay, I did that, but the Okay, I did that, but the results are not particularly enlightening.
I went through the first 100 notices of default filed on 12/15/2008.
19 already lost their house to foreclosure.
45 got Notices of Trustee Sale, but have not been foreclosed yet. At this point all it means is that their foreclosures have been postponed once while something was being worked out. (Most of their NTS were filed between 3/16 and 3/20)
14 are in true “foreclosure limbo”, which means that there were no documents of any kind filed with the county since 12/15.
5 have successfully completed short sales (including one who appears to have sold his house on 10/17/2008, BEFORE his NOD was filed.)
8 probably got some kind of workout, because their NOD/NTS notices were rescinded.
1 guy successfully refinanced.
8 had complicated histories (multiple properties or multiple loans per property) and I haven’t been able to determine their current situations.
Personally I’m surprised by the low number of short sales. It could be that many of those that appear to be “in limbo” are trying to complete short sales and that’s the reason why their foreclosures are postponed.
Eugene… that’s interesting. Eugene… that’s interesting. It seems like perhaps a large number of those NODs are trying to get mods via Obama’s plan and the banks are trying to work something out with them and therefore haven’t foreclosed yet.
The banks are giving people more time to work out mods. Makes sense.
Dan I agree with your Dan I agree with your premise. I have seen a very large number of loan mod attempts now. Many people are trying to loan mod and then will move out and rent the home out so they don’t take as big a hit on the monthly loss.
From what I hear Obama is putting the screws on banks to loan mod pretty much everybody and anybody these days.
Change we can believe in!
***********
Eugene great data mining on that. I cannot tell you how many stories I have heard about people selling short, then changing thier mind and attempting to loan mod, then changing thier mind again, then again. I would imagine each time something like that happens the legal dept for the lender has to postpone scheduled events and such as I would imagine new legislation forces them to try to loan mod if the buyer wants to try it.
SD Realtor wrote:From what I [quote=SD Realtor]From what I hear Obama is putting the screws on banks to loan mod pretty much everybody and anybody these days. [/quote]
You heard right.
Obama and the banks are working in unison to make sure foreclosures don’t flood the market anytime soon, if at all. Obama wants the democrats to remain in control after the 2010 off year elections – and the only way to do that will be to get the economy moving quickly, which means housing prices must start going up using any and all means necessary. The Obama administration doesn’t care if they have to bribe every banker in America with subsidies and bailouts in order to do it.
Its a sad time to live in America if you believe in free markets and capitalism.
I know of 3 acquaintances who I know of 3 acquaintances who told me that they intentionally not paying their mortgage for a few months with the hope to get the attention from the banks to work with them. However, later on, they paid back to the bank. Who knows, these cases could be common. To modify now, I think you have to keep up with paying, not sure if there are still incentives to forget payment for a few months. Could this practice partly contribute to the increase of total NOD numbers without affecting NOT?
Anonymous
15 years ago
As the news has been saying, As the news has been saying, people would still lose their houses because the banks want to remove their bad asset. Hopefully, the amount of people losing their houses would soon decrease.
The market wants valuations The market wants valuations to come down. It doesnt care how it happens. Taxpayers through bank bailouts or individuals getting hammered with haircuts, doesnt matter. Just get down! And it will.
Rich,
Now that FASB has
Rich,
Now that FASB has relaxed mark to market accounting (April 2nd), it makes sense that the banks would want to keep the assets on their books, even if they are not performing.
By holding off on foreclosures, they’re able to bury their balance sheet problems for a later date.
-Gary
chameleon – we had a
chameleon – we had a discussion on this recently. I posted the same theory and it was shot down fairly elegantly:
http://piggington.com/shadow_inventory_the_flood_that_may_never_come
The mark to market rules do
The mark to market rules do not concern marking the value of the loan to the market value of the collateral (in this case the home). They concern marking the value of the loan to what the loan itself (or its securitized end-product) is currently trading at in arms length transactions.
Is it unreasonable to
Is it unreasonable to contemplate the large surge,record and near record surge, in NOD in the last two months as having a latency component from the notification delays that were imposed. I see the potential for the averaging of the artificial NOD trough and the peak being more realistic. Valid or not the exercise tends to cure the divergence in the trend with NOT….so I ask the experts?
There is an easy way to find
There is an easy way to find out if those homes are really in any kind of limbo.
Notices of default rebounded in December. By now December NODs had more than enough time to mature into NTS. Pick a bunch of NODs dated mid-December at random and check their status.
I’ll do that for NODs dated 12/15/2008 and let you know.
Okay, I did that, but the
Okay, I did that, but the results are not particularly enlightening.
I went through the first 100 notices of default filed on 12/15/2008.
19 already lost their house to foreclosure.
45 got Notices of Trustee Sale, but have not been foreclosed yet. At this point all it means is that their foreclosures have been postponed once while something was being worked out. (Most of their NTS were filed between 3/16 and 3/20)
14 are in true “foreclosure limbo”, which means that there were no documents of any kind filed with the county since 12/15.
5 have successfully completed short sales (including one who appears to have sold his house on 10/17/2008, BEFORE his NOD was filed.)
8 probably got some kind of workout, because their NOD/NTS notices were rescinded.
1 guy successfully refinanced.
8 had complicated histories (multiple properties or multiple loans per property) and I haven’t been able to determine their current situations.
Personally I’m surprised by the low number of short sales. It could be that many of those that appear to be “in limbo” are trying to complete short sales and that’s the reason why their foreclosures are postponed.
Thanks for the analysis,
Thanks for the analysis, Eugene.
Given our recent experience with a short sale (on the buyers’ side), I’m not too surprised to see only 5 out of 100 in your sample.
Yes, very interesting…
Yes, very interesting… thanks for taking the time to do that research.
Rich
Eugene… that’s interesting.
Eugene… that’s interesting. It seems like perhaps a large number of those NODs are trying to get mods via Obama’s plan and the banks are trying to work something out with them and therefore haven’t foreclosed yet.
The banks are giving people more time to work out mods. Makes sense.
Dan I agree with your
Dan I agree with your premise. I have seen a very large number of loan mod attempts now. Many people are trying to loan mod and then will move out and rent the home out so they don’t take as big a hit on the monthly loss.
From what I hear Obama is putting the screws on banks to loan mod pretty much everybody and anybody these days.
Change we can believe in!
***********
Eugene great data mining on that. I cannot tell you how many stories I have heard about people selling short, then changing thier mind and attempting to loan mod, then changing thier mind again, then again. I would imagine each time something like that happens the legal dept for the lender has to postpone scheduled events and such as I would imagine new legislation forces them to try to loan mod if the buyer wants to try it.
SD Realtor wrote:From what I
[quote=SD Realtor]From what I hear Obama is putting the screws on banks to loan mod pretty much everybody and anybody these days. [/quote]
You heard right.
Obama and the banks are working in unison to make sure foreclosures don’t flood the market anytime soon, if at all. Obama wants the democrats to remain in control after the 2010 off year elections – and the only way to do that will be to get the economy moving quickly, which means housing prices must start going up using any and all means necessary. The Obama administration doesn’t care if they have to bribe every banker in America with subsidies and bailouts in order to do it.
Its a sad time to live in America if you believe in free markets and capitalism.
I know of 3 acquaintances who
I know of 3 acquaintances who told me that they intentionally not paying their mortgage for a few months with the hope to get the attention from the banks to work with them. However, later on, they paid back to the bank. Who knows, these cases could be common. To modify now, I think you have to keep up with paying, not sure if there are still incentives to forget payment for a few months. Could this practice partly contribute to the increase of total NOD numbers without affecting NOT?
As the news has been saying,
As the news has been saying, people would still lose their houses because the banks want to remove their bad asset. Hopefully, the amount of people losing their houses would soon decrease.
Amrit
The market wants valuations
The market wants valuations to come down. It doesnt care how it happens. Taxpayers through bank bailouts or individuals getting hammered with haircuts, doesnt matter. Just get down! And it will.