Tuesday, September 15, 2009

California Foreclosures for August 2009

The August 2009 ForeclosureRadar foreclosure report for California was released today. NOD and NTS are down MoM, foreclosures are essentially flat. Third party sales continue to rise as investors jump into the supply constrained market. I thought Sean O' Toole did such an excellent job in the release that I will just highlight his comment. Any emphasis added is my own.

"It is clear at this point, that foreclosures are being HAMPered” says Sean O’Toole, founder and CEO of ForeclosureRadar. “Where foreclosures head from here will depend a lot on the administration’s Home Affordable Modification Program, commonly referred to as HAMP. We can clearly see that this program is postponing an awful lot of foreclosures, but don’t expect a wave of foreclosures if it fails, instead expect further government intervention.”
A key feature of the HAMP program is a 3-month trial period, during which foreclosures are postponed to see whether or not the homeowner makes the new, reduced payment as agreed. As a result,the number of scheduled foreclosures that
are being postponed at the lenders request or with their agreement has doubled since details of the program were announced. At the end of August 2009 there were 131,300 foreclosures scheduled for sale, compared to 64,177 at the end of February 2009.
If the HAMP trials succeed, foreclosures should begin to cancel at record rates, which has yet to happen. If HAMP trials fail, foreclosure sales should increase, which also has yet to happen.

"but don’t expect a wave of foreclosures if it fails, instead expect further government intervention."

The government has yet to reduce any level of support for the housing market in history, once a level of support has been introduced it has always remained in effect. I think this is the money quote for the whole article and people need to change their expectations of the market going forward. To expect a rational market where a weak overleveraged borrower who isn't paying is replaced by a stronger borrower who can and will pay is apparently just not going to happen. Money will be printed, the sanctity of contracts will be set aside, it is clear whatever can be done will be done to keep the market inflated. But the other side of that is sales will stay low and the whole RE industry will lose jobs and be much smaller, you can't have it both ways.


ronald said...

"whole RE industry will lose jobs and be much smaller, you can't have it both ways."

Good point. The financial sector since World War 2 has grown along with GDP credit/debt expansion it tends to be fee/commission driven requiring higher levels of money velocity for growth. If you are correct the impact will extend far beyond RE.

CoachingByPeter said...

Every investor must start-up a plan before heading up on buying a property. Learning the basics of real estate is essential rather than visualizing the money aspect. Listen to skilled professionals like bankers, estate agents, home inspectors, etc., they most likely know the latest trend.

Alvin Gregg said...


Thanks for sharing the useful information on "California Foreclosures for August 2009".

California has lost several large employers to other states, interest rates have risen sharply in the last two years, rising consumer debt, and creative financing are all contributing to the ever-increasing number of foreclosures.