California foreclosures surge
 

Peter Viles is reporting California foreclosure "surge": Up 327% from '07 levels.
 

The number of California homes lost to foreclosure in the first quarter surged 327% from year-ago levels -- reaching an average of more than 500 foreclosures per day -- DataQuick said in a report, warning that the widening foreclosure problem could "spread beyond the current categories of dicey mortgages, and into mainstream home loans."

From DataQuick's report on California foreclosures in the first three months of 2008: "Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 47,171 during the first quarter. ... Last quarter's total rose 48.9 percent from 31,676 in the previous quarter, and jumped 327.6 percent from 11,032 in first quarter 2007." That translates into 517 foreclosures every day in the first quarter of 2008.

More: "Homeowners received 113,676 default notices in the first quarter, up 143 percent from a year ago, La Jolla, California- based DataQuick said today in a statement. The level was the highest since at least 1992, when DataQuick's statistics begin."

Despite well publicized federal efforts to reach out to homeowners in default, the odds that they will ultimately lose their homes appear to be increasing. DataQuick reports that, of the homeowners in default, "an estimated 32 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was about 52 percent.

Banks are so capital impaired they are not able to take writedowns until they raise still more capital. More asset sales are coming. In the meantime, because so many problem mortgages are securitized in pools, banks cannot act even if they wanted to.

As the recession deepens, a downward spiral of foreclosures, REOs, and capital raising efforts is going to accelerate. We are nowhere near a bottom. Many banks and lending institutions are going to fail.

 

"FORECLOSURE STATS SET NEW RECORDS AGAIN ACROSS ALL CATEGORIES."

"WE HAVE A DEVALUATION OF AMERICAS REAL ESTATE HAPPENING OVERNIGHT, NEVER BEFORE SEEN IN HISTORY, ABSOLUTELY UNIQUE SITUATION GOING ON."

"97.75% OF HOUSES BEING AUCTIONED WENT BACK TO THE BANK LAST MONTH"

---The discounts at the auctions, which aren't even selling, are around 50-70% off and more. Thats a million dollar home for 300k btw.

NAR ONLY REPORTS LISTED INVENTORY. YOU DON'T SEE THE MASSIVE AMOUNTS OF HIDDEN INVENTORY.

REO/SHADOW INVENTORY IS GOING TO DESTROY YOUR HOUSES VALUE.

DO YOU KNOW THE RISKS OF THE HOUSE YOU ARE POTENTIALLY BUYING? DO YOU KNOW HOW MANY REO'S ARE IN THE NEIGHBORHOOD? 

"A new low for Realtors". This post Tips for buying another home before yours goes into foreclosure was written by Kathy Neilson. Neilson describes it  on her blog

Here’s what she says it takes to pull this off:

If you are considering purchasing another home then letting your present home go into foreclosure here are some tips that will save you trouble later down the line as well as help the transaction run smoothly.

1. You need an excellent lender who can structure your new loan properly; after all there will be questions by the new lender.

2. You need an excellent real estate agent (like me) who knows how to structure this deal. Your real estate agent also needs to know how to find the right home. This may seem strange but not all homes will help the transaction and some actually will hurt your chances of qualifying.

3. There are no longer 100% loans so you will need a down payment. If you don’t have a down payment there are other alternatives but again your agent must be aware of these other options and how to implement them.

4. Once your real estate agent has located a likely home you’ll have to qualify for a new mortgage, so you can’t have any mortgage lates and you’ll have to have sufficient income to qualify for your existing mortgage and the new one. This is where a savvy lender is most important.

Wrong then, wrong again

The same economists who failed to spot this year's financial meltdown are now predicting that everything will soon be fine

The economists are telling us that everything is going to be fine. It seems that the worst is behind us. The credit crunch is over, the tax rebate cheques are in the mail, the dollar will stop falling, and the economy is now expected to pick up in the second half of the year. That is what most economists have been saying.

Here is why they are wrong, yet again. The housing market is currently in a free fall. The latest data from the Case-Shiller 20 city house price index show real prices falling at an almost 30% annual rate. This rate of price decline implies a loss of almost $6tn of housing wealth by the end of the year - that's $80,000 for every homeowner in the country.

This stunning loss of wealth has two important implications for the near-term course of the US economy. First, consumption is certain to decline. For the vast majority of families, their house is their main source of wealth. Tens of millions of baby boomers are approaching retirement without a traditional pension and very little money accumulated in personal savings or a defined contribution pension. The one source of wealth that these people had been counting on in retirement, in addition to their Social Security, was the equity in their home.

This wealth is now disappearing with the collapse of the housing bubble. As baby boomers see the price of their homes drop from $400,000 to $300,000, a typical decline in many areas, they will suddenly find themselves with little or no equity. If they hope to have anything other than Social Security to sustain them in retirement, they will have to hugely increase their savings during their remaining working years.

In many cases the loss of equity will more directly lead to an increase in savings because it will prevent homeowners from borrowing any further against their home. At the peak of the bubble in 2006, homeowners withdrew more than $700bn in equity from their homes. As house prices plunge, tens of millions of homeowners will no longer have any equity against which to borrow. This will leave them no choice except cutting back their consumption.

Standard measures of the size of the wealth effect from housing imply that a loss of $6tn in wealth will reduce annual consumption by between $240bn to $360bn a year, between 2%-3% of GDP. This sort of plunge in consumption would imply a severe recession.

This means that the default rates will surely be heading upward in the months ahead as will the write-off that banks will take on these mortgages. The $250bn or so that has already been written off by the banks is just a down-payment, the big hits are yet to come.

Of course, the economists who most of the media rely upon to inform the public don't see any of these problems ahead, just as they didn't see any problems ahead at this time last year. But those of us who learned our grade school arithmetic know that we can look forward to serious economic and financial troubles ahead.

http://commentisfree.guardi...

 Pending Home Sales Hit New Low

NEW YORK — An industry group said Wednesday that pending U.S. home sales dropped to a new low in March, signaling the housing slump has yet to bottom out even as the spring sell season gets under way.

The National Association of Realtors' seasonally adjusted index of pending sales for existing homes fell to 83.0 from a downwardly revised February reading of 83.8, the index's previous low. The index stood at 103.9 in March 2007.

A reading of 100 is equal to the average level of sales activity in 2001, when the index started.

Falling home prices and a tight credit environment have pummeled the housing market and sent potential buyers to the sidelines to wait out the slump. So far, there's been no evidence that the traditionally strong spring selling season is jump-starting any sales activity.

http://www.huffingtonpost.c...