Look Out Below: Foreclosures Are Trending Up Again

Bank Repossessions Up 55 Percent From December, 23 Percent From Year Ago;
Bank Repossessions Hit 24-Month High In California, 55-Month High in New York;
21 States Post Year-Over-Year Increases in Scheduled Foreclosure Auctions (ReatlyTrac)

This is just in time for Government to make things even worse by reducing lending standards on ALL Government sponsored mortgages. When I say “Government sponsored,” that means TAXPAYER guranteed.

The latest brainchild from the Obama Government has the FHA reducing its mortgage insurance premiums in an attempt to stimulate home sales. These premiums go into the “reserve fund” used to cover defaulted mortgages. The problem is that fund is woefully underfunded and now less money will be going into it. It’s the equivalent of using a tent to seek shelter from a hurricane.

In addition, as has been well-publicized, Fannie Mae and Freddie Mac have reduced their down payment requirements to 3%. That razor-thin slice of equity, by the way, is more than used up once all of the closing expenses are accounted for. That means that anyone buying a house right now is underwater by the time escrow closes and title transfers.

Just in time for the next blood-bath in the housing market:


The graph above from DQNews.com shows the decline in the median home price over the last six weeks. This data is based on actual closings – NOT seasonally adjusted, annualized vomit from the National Association of Realtors. What that chart shows is that anyone who bought a home using a Fannie Mae/Freddic Mac 3%, FHA 3.5% or USDA 0% down payment mortgage is now in a negative equity position – aka underwater.

As for RealtyTrac’s foreclosure report (linked at the top): Florida, Nevada and Maryland had the highest foreclosure rates; the foreclosure rate in 9 out of 20 of the largest metro areas increased year over year for January; 27 States posted a year over year increase in bank repossessions. January hit a 15-month high in bank repossessions. Foreclosures jumped 100% in Phoenix – (Phoenix Business Journal). If you experience any issues with foreclosure, it’s very important that you get the right help. Check out some Denver foreclosure attorneys who will offer legal help and advice for your case.

This comes at a time when mortgage rates are near all-time historical lows. Perhaps even more troubling is that according to RealtyTrac mortgage industry insiders are seeing more defaults related to second mortgages that have been interest-only but are now resetting with larger principal payments.

I warned over a year go that a huge wave of interest-only home equity loans that were underwritten during the housing bubble years would begin to re-set in 2014. The biggest wave of resets is yet to come and we’re already seeing a jump in defaults. This is going to get UGLY.

The homebuilder stocks are set up for an epic crash. Every single one of them uses highly misleading accounting to overstate earnings and hide interest expense. They all now have inventory levels that are equal to or greater than their inventory at the peak of the last bubble – only sales volume is less than 40% of peak sales volume. My homebuilder reports explain in detail why most of these companies will go belly-up over the next few years, starting with the company in my most recent report. You can access these reports here: MAKE MONEY SHORTING HOMEBUILDERS.




4 thoughts on “Look Out Below: Foreclosures Are Trending Up Again

  1. Yep – and just yesterday Otrauma said it is not surprising that the economy is improving under his watch!!!
    No place here for what I think of this marxist – my language would not be suitable for a public space.

  2. It’s not just Obama, he’s just exploiting the hapless and helpless products of our educational system. For over forty years liberals have infiltrated and corrupted our schools and universities producing a majority population of ignorant naieve fools. Our political system is totally corrupt, our government is totally bankrupt, and we are at the mercy of morons like Otrauma…and there is nothing anyone can do to prevent the coming catastrophe. My only hope is that I can capitalize on it and leave something for my grandkids to help them through the resulting chaos. The ONLY question is “when” will the unravelling take hold? It should have long ago, but a lying govt and a corrupt central bank have artificially propped things up. How long can this go on???

  3. Dave –
    I read the HBB regularly – like you these guys have saved my a$$ from the overpriced shacks in Denver – I thought this of interest and wonder if you have seen it……

    Comment by Ben Jones
    2015-02-20 07:11:38
    ‘Four-Year Lows in Institutional Investors and All-Cash Buyers in 2014 Despite Increase in Fourth Quarter’

    “While the overall percentage of purchases by institutional investors is nothing to write home about nationwide, the true impact of these investors can be seen more clearly at the hyperlocal level,” said Daren Blomquist, vice president at RealtyTrac. “There were 35 zip codes nationwide where at least 50 single family homes were purchased by institutional investors in the fourth quarter, with institutional investor purchases representing from 17 percent to 74 percent of all single family home sales in those zip codes.”

    “We are seeing a fair amount of deals in the area as this institutional investor money is really becoming a player,” said Wesley M. Hardin, owner/broker at RE/MAX Alliance, covering the Denver market, which saw an uptick in institutional investors in the fourth quarter. “In fact, I closed a deal this past Wednesday from a REIT back east. They sent the offer without seeing the home and closed in about 10 days. The title company told me this was their 256th purchase in the metro area in the last 12 months.”

    “Cash buyers are still king in Seattle; made up primarily by investors at the low end and international home buyers at the high end,” said OB Jacobi, president of Windermere Real Estate, covering the Seattle market,” said OB Jacobi, president of Windermere Real Estate, covering the Seattle market, where the share of cash sales and institutional investor purchases increased from the third to fourth quarter. “In Seattle, we are beginning to see institutional investors sell off their properties because of the significant equity they’ve been able to build over the past few years.”

    ‘Nearly 8 percent of U.S. cash buyers took out a subsequent mortgage after the purchase, according to a RealtyTrac analysis of nearly 1.5 million all-cash purchases of single family homes nationwide from January 2013 through December 2014.’

    ‘On average the original cash purchase prices were 93 percent of the purchased property’s full market value, and the subsequent mortgage was recorded an average of 202 days — nearly seven months — after the sale.’

    ‘The county with the highest percentage of cash sales with a subsequent mortgage was San Francisco County, California, where 24 percent of cash buyers took out a subsequent mortgage, followed by Denver County, Colorado (21 percent), Marin County, California (20 percent), and San Mateo and Santa Clara County, both in California and both with 19 percent of cash purchases with subsequent financing.’

    Reply to this comment
    Comment by Ben Jones
    2015-02-20 07:13:13
    ‘a REIT back east…sent the offer without seeing the home and closed in about 10 days. The title company told me this was their 256th purchase in the metro area in the last 12 months’
    Because Denver is such a bargain right now. How would you like to be holding that REIT?

  4. I am a member of USAA and have banking and brokerage accounts, and car insurance with them. They are advertising this deal:

    D.R. Horton Incentives
    Here’s How It Works

    We’ve teamed up with “America’s Builder,” D.R. Horton, to bring you thousands of dollars in savings on your next home.
    You can get up to $10,000 See note 1 toward closing costs and upgrades when you purchase a new home from D.R. Horton (or one of D.R. Horton’s companies, Emerald Homes or Express Homes) and finance with USAA Bank. You may also have to use a D.R. Horton-preferred settlement agent or title company to get the full incentives.

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