Consumer: foreclosure

""A total of 78,955 U.S. properties received default notices (NOD, LIS) in November, a 21 percent decrease from the previous month and a 31 percent decrease from November 2009 — the 10th straight annual decrease in default notices. November’s default notices total was the lowest since July 2007. ""

DEFAULT NOTICES, administrative 3 months mandatory paper trail, properly 'served' to meet stage one Legal Requirements...

November 2010 lowest since July 2007 thats 3 years and 5 months = 41 months

so finally exhausted the continued monthly supply of about 80,000 defaulting type house buyers, 3.28 million defaulters

SINCE THE TAIL END CHARLIES finally 'evicted' is/has been at 95,000 / month...(why MORE..hum) ANYWAY, FOR SURE ALL 100% OF THE DEFAULTERS SEEM TO BE CONTINUING TO NOT PAY..remaining rent free during the judicial cycle from default to final eviction...

How Long on average ? 12-24 months per house rent-free? pure guess.. another guess is therrefore HOW MUCH 'TAKE HOME ADDITIONAL SPENDING MONEY IS IT @ 24 months and say $1500/month (very modest estimate, low end). and 3.28 million 'beneficiaries' over the 41 months thus far...

Well, a NICE SOLID $36,100 per household ....11.75 x 10 (6+4) => 11.75 tens of billions..=>.$117.50 BILLION boost to the USA economy, spread over 41 months, very very good...

Another pure guess is IF the US IRS will make an Administrative Final Decision regards the tax status of the UNPAIDFORGIVEN DEBTS on those mortgages...

You see, of course, that for every Bank Tax deduction for 'written off mortgage-debt', that same EQUAL amount of "DEBT FORGIVEN MUST BE TAXED", against the 'beneficiary...shall it be 'short term' or 'long term' windfall income?,

and under what special payment terms shall the IRS allow the money-due to be paid...probably the short term mode = 35% average for blue collar workers, spread over 2 years of the estimated $36,100 / household finally evicted, about $12,600 'back taxes due'

and for non-citizens, non-payment could result in deportation/refusals to renew VISAs and all THAT...right?

A press release from LPS' Mortgage Monitor Report shows Foreclosure Inventory Rising for 5th Straight Month

The November Mortgage Monitor report released by Lender Processing Services, Inc. (LPS) shows that the volume of loans moving to REO continued to drop as moratoria further delayed foreclosure sales. While the 90+ delinquency category has steadily declined, the number of loans moving to seriously delinquent status beyond 90 days far outpaced the number of foreclosure starts. Nearly 2.2 million loans are 90 days or more delinquent but not yet in foreclosure.

Foreclosure inventories also continued to rise for the fifth straight month as delinquent accounts are referred for foreclosure, but the sale of foreclosure properties continued to decline. When compared to January 2008 levels, the foreclosure inventory of Jumbo Prime loans is nearly seven times higher; the inventory of Agency Prime loans is nearly six times higher; and the foreclosure inventory of Option ARM loans is approaching five times the inventory in January 2008.

The report also shows that one-third of loans that are 90 days or more delinquent have not made a payment in a year; however, the number of new problem loans declined nearly 5.4 percent from October, which is opposite of the seasonality trend that typically impacts new delinquencies this time of year. Self-cures for loans one to two months delinquent increased in November to a six-month high.

In the month of November, 261,153 loans were referred to foreclosure, which represents a 0.7% month-over-month decline. The total number of delinquent loans is nearly 2.1 times historical averages - and foreclosure inventory is currently at 7.7 times historical averages.

As reported in LPS' First Look release, other key results from LPS' latest Mortgage Monitor report include:

Total U.S. loan delinquency rate: 9.02 percent
Total U.S. foreclosure inventory rate: 4.08 percent
Total U.S. non-current* loan rate: 13.10 percent
States with most non-current* loans: Florida, Nevada, Mississippi, Georgia, New Jersey
States with fewest non-current* loans: North Dakota, South Dakota, Alaska, Wyoming, Montana

Charts From The Report

The report is 34 pages long. Inquiring minds may wish to give it a closer look. Here are a few select charts.

click on any chart for sharper image

Delinquent and Foreclosure Rates by Month

Total Delinquency Percent Excluding Foreclosures

Total Foreclosure Percent By Product

Foreclosure Increase Compared to January 2008

Loan Cures

Serious Delinquencies

Foreclosure Starts vs. Serious Delinquencies

While there are some welcome trends in direction, actual foreclosures are lagging. The pent-up need to foreclose is huge.

Moreover, mortgage rates have rising nearly a full percentage point in the last 45 days. This will put a damper on already depressed home sales, making it harder to unload inventory.

Look for months of inventory to soar in the upcoming months with continued declines in home prices. Contrary to what most think, falling prices are a good thing. Home prices need to fall to a point low enough where genuine demand kicks in.

Foreclosure moratoriums are counterproductive and exacerbate existing problems.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Tuesday, December 28, 2010

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