Foreclosure moratorium ends March 31st

The beginning of this selling season has been marked by a distinct lack of the usual seasonal spring uptick in supply. I've attributed that to the number of foreclosure moratoriums from July 2008 forward.

Fannie & Freddie, with most major servicers following suit, have had a moratorium on since the Administration announced their plan. This is set to end tomorrow night.

There of course could be another moratorium announced, though the drumbeat for that hasn't been loud. And there is the extra days added for Notice of Defaults added for certain cases in the last California budget. But I think we should start seeing the additional supply hit the market by mid-May. I think this would be a good thing for the market as homes going under contract have been brisk and it is a good chance to liquidate inventory while rates are low and the tax credit is in effect.

One way you could check if foreclosures are happening is by clicking on the 3 links on the right hand side under links of the trustee sale posting companies (one requires a free signup). Put in your favorite city and watch the daily foreclosures. For the cities I've been following it has been unusual to have more than 1 or 2 foreclosures, if any at all, except for the most distressed areas. If that starts climbing to a consistent 2-5 a day that will indicate the servicers are starting to get their hands back on houses and those will eventually show up on the MLS.

Bill in California Budget adds 90 more days to the foreclosure process

California Foreclosure Prevention Act:

Existing law requires that, upon a breach of the obligation of a mortgage or transfer of an interest in property, the trustee, mortgagee, or beneficiary record a notice of default in the office of the county recorder where the mortgaged or trust property is situated and mail the notice of default to the mortgagor or trustor. Existing law provides that, after not less than 3 months after the filing of the notice of default, the parties described above may give notice of sale, stating the time and place of the sale, as specified.

This bill, until January 1, 2011, and only with respect to specified loans that were recorded between January 1, 2003, to January 1, 2008, would prohibit a mortgagee, trustee, or other person authorized to take sale from giving a notice of sale for an additional 90 days if the loan at issue is the first mortgage or deed of trust that the property secures, the borrower occupied the property as his or her principal residence at the time the loan became delinquent, and the notice of default has been filed. The bill would exempt certain loans from this prohibition, including, upon order of the Commissioner of Corporations, the Commissioner of Financial Institutions, or the Real Estate Commissioner, as applicable, the loans of a mortgage loan servicer, as defined, if the mortgage loan servicer applies to the commissioner for an exemption indicating that it has implemented a loan modification program with specified features and the commissioner concludes that the program meets specified requirements. The bill would permit a mortgage loan servicer to submit a revised application if its application is denied, and would permit the commissioner to revoke an exemption under certain circumstances. The bill would require the commissioners to adopt regulations in this regard, as specified. The bill would require the Secretary of Business, Transportation and Housing to report to the Legislature 3 months after the first exemption is granted regarding the details of the actions on exemption of loans serviced by a mortgage loan servicer under a loan modification program and to submit subsequent reports every 6 months thereafter. The bill would require the secretary to post specified information on the exemption program on the agency's Internet Web site
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So unless a servicers offers loan modifications they will be hit with a 180 day waiting period after filing a NOD instead of a 90 day waiting period. As REO inventory gets whittled down sales will freeze up because there isn't enough inventory in the affordable ranges. People want to buy homes but can't afford them, making sure there are fewer affordable homes are out there doesn't seem like a good way of helping the housing market recover.