Foreclosures
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Foreclosures

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By: Selma Lewis, Research Economist

By: Selma Lewis, Research Economist

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    Foreclosures   Foreclosures Presentation Transcript

    • Foreclosure Overview Shadow Inventory Selma Lewis Paul C. Bishop, Ph.D. Managing Director, Real Estate Research Economist, Research NATIONAL ASSOCIATION OFOF REALTORS® NATIONAL ASSOCIATION REALTORS® March 25, 2010
    • Outline O tli  National trends  Trends by state and by county  Roll rates trends  RCI Distressed Sales by state  National shadow inventory  Variables impacting shadow inventory NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Number f Distressed L N b of Di t d Loans 900 800 700 ds Thousand 600 500 400 300 200 100 Mortgage Foreclosures 0 Started 06/Q1 06/Q2 08/Q1 09/Q1 09/Q2 06/Q3 06/Q4 07/Q3 07/Q4 08/Q3 08/Q4 09/Q3 09/Q4 07/Q1 07/Q2 08/Q2 Series 2 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 Source: Counts based on Extrapolated MBA NDS Q4. 80% Factor for FC and DQ NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Prime vs. S b i Pi Subprime D li Delinquency R t Rates Source: MBA NDS NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Foreclosure Inventory F l I t Source: MBA NDS NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 2009 Totals •California, Florida, Arizona, California, Illinois account for 50 percent of national total Total % %Ch %Ch State 1/every X Rank Properties Housin from from Name HU (rate) •These 13 states account for These with Filings g Units 2008 2007 72% of total delinquency filings -- U.S. 2,824,674 2.21 45 21.21 119.67 •Vermont lowest foreclosure rate 1 Nevada 112,097 10.17 10 44.28 225.7 a d the and t e lowest absolute number u be 2 Arizona 163,210 6.12 16 39.6 323.17 of foreclosures, only 143 filing 3 Florida 516,711 5.93 17 34.1 212.61 reported, or 0.05% of its housing 4 California 632,573 4.75 21 20.81 153.52 units. 5 Utah 27,140 2.93 34 82.93 264.88 6 Idaho 17,161 2.72 37 101.61 371.46 •North Dakota second best, with 7 Georgia 106,110 2.68 37 24.46 79.67 just 0.13% of its housing units 8 Michigan 118,302 2.61 38 11.54 35.65 receiving notice 9 Illinois 131,132 131 132 2.5 25 40 31.81 31 81 103.91 103 91 10 Colorado 50,514 2.37 42 0.23 28.2 •West Virginia was the third best, 11 Oregon 34,121 2.12 47 89.55 303.27 South Dakota ranked fourth best 12 Ohio 101,614 2.01 50 -10.53 12.93 13 M l d Maryland 43,248 8 1.87 8 54 33.74 129.088 Source: Realtytrac, Inc. NATIONAL ASSOCIATION OF REALTORS® Research Division
    • U.S. Average 7.7% 6.1% 4% 8.3% 2.5% 6.3% 6.9% 11.1% 4.8%6.4% 7.2% 3.5% 7.5% 8.7% 8.3% 3.7% 11.1% 11 1% 8.1% 5.7% 6.7% 10.4% 19% 4.4% 9.6% 9.2%7.3% 7.2% 11.2% 9.5% 12.5% 5.9% 6.1% 5.3% 6.2% 5.8% 5 8% 7% 6.4% 7.1% 13.2% 6% 6.3% 5.6% 7.8% 9.1% 6.8% 9.9% 6% 7.7% 20.4% Percent of Seriously Delinquent Mortgages 2009 Q4 Low Below Average Average 3% Above Average High 8.3% Very High Source: MBA NDS Prepared by Selma Lewis NATIONAL ASSOCIATION OF REALTORS® Research Division
    • U.S. Average 10% 12.2% 14.3% 10.1% 4.2% 12.1% 10.2% 6.6% 6.8% 13.5% 7.2% 9.6% 8.9% 12.2% 9.7% 13.2% 6.8% 15.1% 9.2% 10% 11.3% 10.4% 6.3% 6.6% 11.9%14.3% 14.6% 12.2% 5% 6.8% 7.5% 9.2% 8.3% 9.6% 9.1% 9 1% 8% 13.2% 8.9% 8.1% 9.5% 13.6% 11.6% 11.3% 9.6%10.6% 14.5% 11.8% 11.8% 8.6% Change in Seriously Delinquent Mortgages Q3 2009 to Q4 2009 Decrease Small Change Below Average Change -0.3% Average Change 13.2% Above Average Change Large Change Source: MBA NDS Prepared by Selma Lewis NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 90+ days Delinquency Rates Q4 09 Source: Credit reporting agency, TransUnion LLC'sTrend Data database. NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 90+ days Delinquency Rates Year-Year Change Year- Source: Credit reporting agency, TransUnion LLC'sTrend Data database. NATIONAL ASSOCIATION OF REALTORS® Research Division
    • U.S. Average -9.0% -14.3% 3.7% 3.7% -6.9% -14.7% -5.4% -13.2% -3.6% -9.7% -9.1% -9.5% 9.5% -9.1% -25.7% 13 2% -13.2% -23.5% 23 5% -7.9% -6.5% -12.7%-19% -20.1% 1.3% -6.9% -10.3% -2.4% -19.3%54.9% -12.7% 12.7% -7% -35.4% -8.8% -7.2% -15.6% -2.3% -1.7% -6.3% -17.2% -2.3% -15% 1% -3.6% -5.4%7.3% -7.1% -10.6% 2.8% -14.4% Change in Foreclosure Starts Q3 2009 to Q4 2009 -35.4% - -26.6% -26.5% - -14.7% -14.6% - -2.7% -19% -2.6% - 9.2% 9.3% - 21.2% -14.9% 21.3% - 54.9% Source: MBA NDS Prepared by Selma Lewis NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Other Trends for Delinquencies Oth T d f D li i • Ratio of foreclosures completed to loans in the process of foreclosure in the previous month shows the widening gap in the foreclosure completion rate ▫ In 2007, 50% of the previous month’s loans in process of foreclosure. Now is18%. ▫ The number of foreclosures completed on prime loans remained basically flat and the number of completed subprime foreclosures fell 42% • P l of P bl Pool f Problem Loans Continues to G C i Grow and S d Stagnate ▫ Days in foreclosure process went from 260 days in 2008 to 410 days in Jan 2010 • Largest increase in delinquency among borrowers with credit score >680 • 30% of foreclosures are homes in the top tier of local home values ▫ Top-tier homes make up twice the proportion of foreclosures than 3 years ago. Reasons: High delinquency rates in Prime, Alt-A and Option ARM mortgage products and declining cure rates • Last year worst deterioration among the three prime categories (non-agency, agency and jumbo prime loans) ▫ increased unemployment, jumbo financing was very tight in 2009 • FHA product i experiencing th high t rate of new seriously d li d t is i i g the highest t f i l delinquent l t loans. ▫ 9.4% in January, but origination down 10% over December NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Roll Rates R ll R t – 2005 t present to t Source: LPS Mortgage Monitor NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Other T d f R ll Rates Oth Trends for Roll R t • Early stage roll rates increased most dramatically in the non- non agency Jumbo prime product followed by non-agency conforming prime • However, compared to January 2008, agency prime has experienced the greatest deterioration in early stage rolls. • 30% of foreclosures are still pre-sale after 12 months, twice the level of one year prior. Slight decline in October, due as much to REO Outs as to Cures or Voluntary Payoffs. y y • REO leaving the balance sheet was declining in the middle of 2009 but it picked up again in September , and is around 26% p p g p NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Confidence Index Foreclosures and Short Sales NATIONAL ASSOCIATION OF REALTORS® Research Division
    • National Distressed Sales 4 Month Average 32.2% 27.8% 26% NA NA NA 33.4% 41.4% 57.1% 22.4% NA 25.9% NA 10.2%16.3% 57.1% 57 1% 18.9% NA NA 15.6% 16.2%20.5% 78.8% NA 28.2% 34.2% 33.9% 41% 27.2% 54.3% 28.7% NA 31 1% 18% 30.5% 31.1% 20.7% 23.4% 24.5% 57.8% 10.7% 12.8% 33% 23.5% 31.7% 51.7% NA 20.2% 15% 47.5% Share of Distressed Sales 4 month average Below Average Average NA Above Average High Above Average NA Insufficient Response Rate Source: NAR RCI Prepared by Selma Lewis NATIONAL ASSOCIATION OF REALTORS® Research Division
    • National Foreclosure Sales 4 Month Average 21.4% 17% 15% NA NA NA 20% 28% 37% 15% NA NA 18% 6% 3% NA 37% 13% NA 10% 12% 10% 52% NA 18% 18% 22% 33% 21% 33% 17% NA 23% 14% 25% 19% 18% 19% 36% 9% 4% 32% 12% 23% 42% NA 15% 7% Share of Foreclosure Sales 27% 4 month average th Low Below Average Average Above Average NA High Very High NA Insufficient Response Rate Source: NAR RCI Prepared by Selma Lewis NATIONAL ASSOCIATION OF REALTORS® Research Division
    • National Rate of Prime Loans in Foreclosure or REO is 2.58% 2 58% % of prime loans in foreclosure or REO 0.4% - 1.2% 1.2% - 2.8% 2.8% - 4.5% 4.5% - 6.2% 6.2% - 12.8% Source: Loanperformance.com Prepared by Selma Lewis NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Lender-Owner Properties in 100 Largest Metros December 2009 Legend g 0.55 - 2.22 2.23 - 5.46 5.47 - 8.69 8.70 - 11.92 11.93 - 17.99 Average REOs per 1,000 mortgageable properties for the 100 larest metropolitan areas: 4.27 Average REOs per 1,000 mortgageable properties for the United States: 3.29 NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Change in Lender-Owned Properties in Largest 100 Metros September 2009 to December 2009 Legend -3.38 - -1.28 3 38 1 28 -1.28 - -0.76 -0.76 - -0.25 -0.25 - 0.25 0.25 - 0.76 0.76 - 1.23 Average change in REO property rate per 1,000 mortgageable properties for the 100 larest metropolitan areas: -0.05 Average change in REO property rate per 1,000 mortgageable properties for the United States: -0.02 NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Current Mortgage Sit ti C t M tg g Situation Roll Rates Roll Rates from % of loans in Q4 # of loans in Q4 from LPS LPS (most recent 2009 2009 (average) 4 month av) Foreclosure Inventory (end of Q) 4.58% ~2,487,000 100% 100% 90 days 5.09% ~2,764,000 30.0% 20.0% 60 days 1.73% ~939,000 36.8% 44.7% 30 days y 3.63% ~1,971,000 22.5% 27.5% Current 89.55% ~48,635,000 1.5% 1.8% Total Loans Serviced ~54,300,000 54 300 000 NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Shadow I Sh d Inventory E ti t t Estimate Existing Foreclosure Inventory 2,487,435 in 30 days 552,884 in 60 days 83,998 in 90 days 48,469 in 120 days 24,034 in 150 d days 24,034 in 180 days to 360 days 24,034 per month Total Additional Foreclosures 901,659 TOTAL Foreclosures + 60 days 3,124,318 Less SDQ already on the market l d h k (estimated at 24% of SDQ loans) -749,836 Less Modifications (60% of trials in February) -602,341 REO not on the market 645,920 Current Shadow Inventory 2,418,060 NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Shadow Inventory estimates y (1.7 -7 Mill) depend on… 1. On roll rates - % of loans rolling into next stage of default 2. Making Home Affordable Program and other mitigation programs g p g 3. Future unemployment / Loss of Income 4. Strategic defaults 5. Rate of REOs getting released 6. Upcoming wave of Option ARM resets NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 1. Roll Rates 1 R ll R t • Rolls into foreclosure are hitting new all time lows • Rate of seriously delinquent deterioration remains close to record highs. g • If we are to use different roll rates in our estimate, shadow inventory could range from 1.2 million to 2.0 million. NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 2. Making Home Aff d bl 2 M ki g H Affordable • Number of Trial Period Plan Offers Extended to Borrowers (Cumulative) = 1,354,350 1 354 350 • All Active Modifications (Trial and Permanent) = 1,003,902 • 89% of eligible mortgage debt outstanding covered by HAMP participating servicers. • Median saving 36% of before-modification payment; median savings is more than $500 • Borrowers are eligible to earn up to $1,000 to be applied to their outstanding balance. NATIONAL ASSOCIATION OF REALTORS® Research Division
    • For HAMP reports: p http://www.makinghomeaffordable.gov/ A complete list of HAMP activity for all MSAs is available at: http://makinghomeaffordable.gov/docs/MSA%20Data%20February.pdf NATIONAL ASSOCIATION OF REALTORS® Research Division
    • U.S. Average 29% 35.5% 28% 32.2% 20.5% 36.6% 35.8% 26.9% 27.7% 26.5% 27.5% 46.5% 20.6% 32.3% 26.9% 26 9% 41.9% 41 9% 30.2% 20.2% 27% 31.9% 31.2% 20.6% 18.4% 43%36.6% 37.4% 36.1%15.7% 32.9% 28.9% 26.2% 21.7% 29.1% 37% 17.7% 30.7% 22.6% 38.8% 15.2% 29.7% 20.5% 27.3% 21.8%21.7% 31.9% 23.3% 21.3% 20.9% Share of Seriously Delinquent Mortgages in HAMP Low Below Average 23.4% Average 34.4% Above Average High Source: MBA NDS, Feb HAMP Prepared by Selma Lewis NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 2. Making Home Aff d bl 2 M ki g H Affordable NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 2. Making Home Aff d bl 2 M ki g H Affordable 12-Month Re-default R 12 M h R d f l Rate by M difi i T b Modification Type NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 3. Unemployment/Loss of I 3 U l t/L f Income NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 3. Unemployment/Loss of I 3 U l t/L f Income NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 4. Strategic Defaults 4 St t gi D f lt • 1380 square foot house in Salinas, California • $585,000 in January of 2006 ▫ $4300 - 30-year fixed, 0 down, 6.5% APR • House now only worth $187,000 $187 000 ▫ with a 5% down = total monthly payment of <$1200 per month – or rent a similar house for about $1000 • Would save ~ $340,000 by walking away $340 000 • 26% of existing defaults are strategic • Borrowers with higher credit scores are 50% more likely to strategically default • No household would default if the equity shortfall is less than 10%of the value of the house NATIONAL ASSOCIATION OF REALTORS® Research Division
    • National negative equity share is 23.8% 16% N/A 7% 8% N/A 16% 17% 38% 23% 19% N/A 15% 6% 16% N/A 38% 12% 17% 9% 8% 16% 70% 9% 20% 23% 14% 21% 21% 11% 35% 20% N/A 11% 16% % 24% 9% 10% 14% 51% 6% 12% 13% 13% N/A 9% 28% 12% N/A 48% Negative Equity Share Below Average Average Above Average High Above A Hi h Ab Average 10% Very High 8% No Data NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 5. 5 REO saturation rate t ti t %Change REO %Change REO Metropolitan A M t lit Area Y/Y Saturation S t ti Metropolitan A M t lit Area Y/Y Saturation S t ti Riverside-San Bernardino- Birmingham-Hoover, AL 6.6% 29.3% Ontario, CA -12.2% 50.0% Tampa-St.Petersburg- Orlando, FL -20.3% 41.6% Clearwater, FL -7.5% 24.2% Dallas-Fort Worth-Arlington, San Jose-Sunnyvale-Santa TX 3.0% 39.8% Clara, CA 11.4% 23.2% Sacramento--Arden-Arcade-- Denver-Aurora, CO 11.2% 22.9% Roseville, CA 0.4% 37.5% New Haven-Milford, CT -1.4% 19.7% Memphis, TN-MS-AR 20.6% 36.8% Seattle-Tacoma-Bellevue, WA -6.3% 18.6% y Houston-Baytown-Sugarg Providence-New Bedford-Fall Land, TX 5.6% 36.5% River, RI-MA -1.8% 15.4% Minneapolis-St. Paul- Baltimore-Towson, MD -6.2% 15.0% Bloomington, MN-WI -3.7% 34.7% Louisville, KY-IN 4.9% 14.3% Cleveland-Elyria-Mentor, OH 24.7% 33.5% Virginia Beach-Norfolk-Newport Los Angeles-Long Beach- Angeles Long Beach News, VA-NC VA NC -4.8% 4.8% 14.1% Santa Ana, CA -0.5% 33.1% New Orleans-Metairie-Kenner, San Francisco-Oakland- LA 1.9% 13.4% Fremont, CA 13.2% 30.0% Boston-Cambridge-Quincy, MA- Jacksonville, FL -12.1% 29.8% NH -1.0% 11.1% Columbus, Columbus OH 4.7% 4 7% 29.6% 29 6% Oklahoma City OK City, 9.7% 9 7% 9.1% 9 1% Atlanta-Sandy Springs- Honolulu, HI 0.4% 8.4% Marietta, GA -3.4% 29.4% Pittsburgh, PA 4.8% 8.3% NATIONAL ASSOCIATION OF REALTORS® Research Division
    • 6. M thl Mortgage Rate Resets 6 Monthly M tg g R t R t NATIONAL ASSOCIATION OF REALTORS® Research Division
    • Questions Selma Lewis Economist, Economist Research NAR – Washington, DC 202-383-1078 slewis@realtors.org www.realtor.org/research www.realtor.org/righttools We’re on Facebook “NAR Research” NATIONAL ASSOCIATION OF REALTORS® Research Division