Tag Archives: foreclosure

REO sales may not peak until 2013

Foreclosure Sign, Mortgage Crisis

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REO sales may not peak until 2013.

This is a frightening article from HousingWire, not recommended for all audiences…

They run some estimated numbers of potential foreclosures throughout 2012 and 2013.  Their estimates are staggering to say the least.  This year, nationally speaking, the banks liquidated approx 525,000 properties.  In 2013 they are expecting as many as 1.48 million foreclosures and liquidating roughly 595,000 properties.

It is difficult to say what impact our region will feel from this yet as these are only estimates and these estimates have been all over the map…


In 2013, REO sales could reach 1.48 million properties, according to estimates from Bank of America Merrill Lynch analysts, a 10% increase from projected amount in 2012.

…Most of the projected increase will come as the government begins to unload its backlog. The government-sponsored enterprises and HUD, analysts estimate, will liquidate roughly 595,000 properties in 2013 alone.

We have moved well beyond the early days of the subprime mess.  We are now dealing with traditional mortgages with owners in trouble because of job loss and underemployment.

The only way out of this mess is to turn the economy around.

* on a related subject.  If you find yourself as one of the many households facing foreclosure from job loss or whatever reason – there are some resources out there for you.

A Foreclosure Clinic will be held at 6:30 p.m. Thursday, Oct. 27 at the Savage Library.

Read more: Savage Pacer – Foreclosure Employment is No 1 factor

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Hennepin County Foreclosure Risk Scores by City and Zip, how does your zip code rank?

Here is some good information on foreclosures and delinquency by zip code.  Once again it is not in terms of actual numbers, but rather by “ranking” or “score”.  So it doesn’t give us a number of housing units that may be hitting the market in the shadow inventory.

I stumbled upon a website called Foreclosure-Response.org   Foreclosure-Response.org offers resources intended to help states and localities respond to the foreclosure crisis.

Explanation of the Data they have compiled:

To help states and communities make informed decisions about how to allocate and spend their resources for foreclosure prevention and neighborhood stabilization, the Local Initiatives Support Corporation (LISC) has developed datasets with foreclosure “risk scores” at the ZIP Code level within each state and also within each metropolitan area. These scores incorporate measures of subprime lending, foreclosures, delinquency, and vacancies.

…In the Intrametropolitan ZIP Code level Excel workbooks provides the foreclosure risk score for ZIP Codes by metropolitan area; this score allows users to look at the relative foreclosure risk of all ZIP Codes in a metropolitan area. The highest risk ZIP Code in the metro area is assigned a score of 100 and all other ZIP Codes are assigned a score relative to the highest risk ZIP Code.

LISC cannot provide loan and foreclosure counts at this level of geography because these estimates are based on proprietary data. Therefore, in addition to the foreclosure risk scores, the table contains summary scores for each of the subprime, foreclosure, and delinquent loan components. The scores indicate relative risk of ZIP Codes on each component individually. For example, the subprime component score is only based on the number of subprime loans and percentage of all loans that are subprime. The highest risk ZIP Code in terms of subprime loans in each metro area receives a score of 100 and a ZIP Code with a score of 50 is estimated to have about half the risk level.

So I downloaded their data set for the Minneapolis/St Paul area by Zip Code, called their IntraMetroRiskScores.   Again, it doesn’t give the actual numbers of loans but it shows the zip codes/cities risk  score compared against the highest risk zip code in the area.  In the Minneapolis / St Paul metro area, zip code 55441 is the highest risk area and therefore scored at 100.  So the other areas are ranked against that benchmark.

click to enlarge

The above were all listed under Minneapolis, and then the Zip Codes.  I see Plymouth and Bloomington are listed above by zip code.  Below were also listed by Zip Code but were also broken down by City, so I charted those separately because it easier to identify by name rather than zip code…

click to enlarge

This data is a little out of date being from March 2011, but it still paints a good picture of the regions foreclosure risk by zip code.   I did read on their website that they do not publish the actual numbers of loans at risk of foreclosure because it is proprietary information.   If we had a ballpark figure of loans at risk of foreclosure, we could use these figures to calculate how many potential homes could hit the market in each zip code.  Once we have that we could run some absorption rate calculations to figure out the impact on the market and make some guesses on price declines.

If you are interested in other areas, got to their website to get the data set.  They have every zip code in the Country.

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RealtyTrac: Foreclosures on Slow Burn, August 2011

RealtyTrac released this news this evening.  There was no mention of Minnesota in the report, however we are still running middle of the pack in their foreclosure heat map.

The report talks about how foreclosure activity has been slowly declining but they are expecting it to pick back up as banks will want to move the next wave through the system.

“U.S. foreclosure activity has been mired down  since October of last year, when the robo-signing controversy sparked a flurry  of investigations into lender foreclosure procedures and paperwork,” said James  Saccacio, chief executive officer of RealtyTrac. “While foreclosure activity in  September and the third quarter continued to register well below levels from a  year ago, there is evidence that this temporary downward trend is about to  change direction, with foreclosure activity slowly beginning to ramp back up.

“Third quarter foreclosure activity increased  marginally from the previous quarter, breaking a trend of three consecutive  quarterly decreases that started in the fourth quarter of 2010,” Saccacio  continued. “This marginal increase in overall foreclosure activity was fueled  by a 14 percent jump in new default notices, indicating that lenders are  cautiously throwing more wood into the foreclosure fireplace after spending months  trying to clear the chimney of sloppily filed foreclosures.”

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RealtyTrac Foreclosure Heat Index Map

RealtyTrac Foreclosure Heat Index Map Minnesota

RealtyTrac Foreclosure Activity Counts

Hennepin County has 973 foreclosures according to RealtyTrac, they break that down further with the housing units to foreclosure ratio of 1 in every 520 housing units.  (quick math in my head 1 / 520 = .19% ?  is that right?  )I really wish we had a historical perspective on the foreclosure rate as a benchmark…

Still trying get a grasp on this phantom “Shadow Inventory” and what kind of numbers we are looking at for the Twin Cities…


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2nd Quarter Mortgage Delinquency rates for Minnesota, our Shadow Inventory

Believe it or not I have been struggling to find good data to show what kind of potential Shadow Inventory we may be seeing down the road for Minnesota, and more specifically the Twin Cities metro region.  The Shadow Inventory is theoretical in nature and estimates vary greatly, so trustworthy sources are important as well.

I was able to find some information from the Minneapolis Federal Reserve for the 2nd Quarter of 2011.  I would imagine the 3rd Quarter should be coming out sometime soon and I will keep on a lookout for that report.

In the meantime, I will share some of the information in this 2nd Quarter 2011 report on Minnesota.  The report was sort of lacking on details for the Twin Cities region, but it is a start…   I am in search of actual numbers of homes or mortgages, so if you happen to know where those can be found please let me know.

The highest levels of foreclosures are just north of the Twin Cities in Isanti and Mille Lacs Counties.


Below breaks it down by Zip code, which is little more helpful.  Hennepin County seems to have the highest concentration in the northeast corner of the County.  What I am really interested in,  getting my hands are the raw numbers of mortgages by Zip Code…  Haven’t found them yet, but this is at least getting closer.

This chart is a little more telling on the what we might expect in the way of Shadow Inventory for all of Minnesota.  It appears to be coming down substantially from last year, but still a fairly large wave.   Judging by the national reports, this has probably come down even further in the 3rd quarter.

 Several questions remain:  How many of  these delinquencies will end up in foreclosure? Are they are already for sale on the MLS and already factored into our supply?   And, Will this wave continue to shrink?

I guess like any good research, it leaves us with more questions than we started with….

click to view full report



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Deficiency Judgments from Home Foreclosures Loom Heavy on the Horizon – Wall Street Journal

Deficiency Judgments from Home Foreclosures Loom Heavy on the Horizon – Wall Street Journal.

John Murphy has a great post you should read if you are in the midst of a foreclosure or short sale.  It looks like the banks are gearing up for deficiency judgments.  Seek legal advice, not Realtor advice when going through foreclosure or short sale process.


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Housing market hit bottom: former RealtyTrac exec. Catfish Recovery

Line art drawing of a Catfish

Image via Wikipedia, "our new housing market mascot"

Housing market hit bottom: former RealtyTrac exec.

Well, it’s official, we have hit bottom!  At least according to Rick Sharga, former RealtyTrac exec.

The U.S. housing market hit bottom this year and will remain flat until 2014, when it will start to slowly recover, said Rick Sharga, an executive vice president withCarrington Mortgage Holdings.

“We’re looking at a catfish recovery,” he told attendees at the Asian Real Estate Association of America conference in San Francisco Friday, saying the market will bump along the bottom for some time before starting to revive.

More than a million foreclosure actions that should have taken place this year have not yet moved forward, and that delay pushes a resolution of the housing market’s problems into next year and beyond, he said, citing data from RealtyTrac, where Sharga served as a senior vice presidentuntil this week.

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The article goes on to mention the shadow inventory problem holding recovery back along with anemic economic growth.

Of all the predictions so far, this sounds to me like the most realistic one.  But who knows, it is anyone’s guess at this point.

I do like his term “Catfish Recovery”, bumping along the bottom.  There is nothing quite like the ‘down home’ ‘common sense’ phrases..



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CoreLogic’s report shows decline in Shadow Inventory

This is great news.  CoreLogic tracks the “Shadow Inventory” levels.  The Shadow Inventory are the potential homes to hit the market due to foreclosures and is tracked by delinquency rates, so it is a moving target and difficult to track accurately.

These are of course National figures, and we are still unsure how much of this will impact our market.  I have been speculating that we have been purging a lot of our shadow inventory through Short Sales in our marketplace because of our Judicial Foreclosure process in Minnesota.  I am still trying to come up with reliable shadow inventory figures for our local marketplace.

The nation’s residential shadow inventory as of July declined slightly to 1.6 million units, representing a supply of five months, according to a report from CoreLogic.

That’s down from 1.9 million units, a supply of six months, from a year ago, and follows a decline from April when shadow inventory stood at 1.7 million units.

“The steady improvement in the shadow inventory is a positive development for the housing market,” said Mark Fleming, chief economist for CoreLogic. “However, continued price declines, high levels of negative equity and a sluggish labor market will keep the shadow supply elevated for an extended period of time.”

Read Full Article from CoreLogic

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Minnesota’s Shadow Inventory, Foreclosures to hit the market

I have stated several times on my blog that I believe that Minnesota has cleared a lot of the Shadow Inventory by Short Sales.  Still trying to quantify that but finding it difficult to get good data.  Most of the data on the Shadow Inventory is speculative in nature,  by definition Shadow Inventory are homes that may be foreclosed upon.  So that can be speculative by Loan to Value ratios, 30 days late, 60 days or Default. Even at Default stage, a homeowner can still redeem.    Also, most of the data is National and not broken down by State, Region or City.

RealtyTrac has some interesting data that may be good news to our local market.

This shows Foreclosure Activity across the nation.  I would imagine you could lay the unemployment rates across this map and they would line pretty close to foreclosure activity…

Comparing Minnesota with Wisconsin; I picked Wisconsin because  the Packer fans need to be humbled…  We are also familiar with Wisconsin being neighbors as well as our populations are fairly comparable.  Wisconsin has a population of 5,686,986 and Minnesota 5,303,925. 

This one shows us that both Minnesota and Wisconsin have quite a bit of foreclosures.  These are “all foreclosures”. RealtyTrac categorizes foreclosures into 3 categories: Pre-Foreclosure, Auction, and REO.  Pre-Foreclosure would be notice of default, Auction would be Sheriff’s Sale, REO is the bank has taken it back.   This graph shows all three: (Blue=Minnesota, Packer Gold=Wisconsin)

THIS is what I think looks promising for our market.  This is the “Pre-Foreclosure” comparison.  ( Blue is Minnesota and Packer Gold is Wisconsin…)  This would be Default notices.

One possibility on this data, RealtyTrac doesn’t have data on Pre-Foreclosures in Minnesota!  hmmm….  I’ll choose to believe their data is accurate for now…

We also seem to be clearing our REO inventory a little better..  Maybe some one with some quick math skills can compare the populations to the REO inventory #’s and compare percentages…

So far, RealtyTrac seems to provide the best information on the local markets.  You can view their great data at RealtyTrac.com

We should be getting a national update soon for the 3rd Quarter Shadow Inventory from CoreLogic.

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10 Million more Mortgages set to default.

Wow, OMG, WTF, how many other 3 letter words could describe this?

I was reading this article from HousingWire and the numbers are staggering.  If these numbers prove to be accurate I will be eating my words that “I think we have weeded a lot of our shadow inventory by Short Sales“.  10 Million – that is only 200,000 more mortgage defaults per State!  (and I hardly think North and South Dakota will have that many mortgage defaults, that’s more than half their population!  Sorry Dakotan’s – couldn’t resist!)  Good thing we have managed to sell off that excess 10,000 in inventory over the last 3.5years, looks like we have another 60.5 years in inventory to sell off!

Thought I would pass this along.  I am a little skeptical of these figures because these are figures being used to “get Congress to act” and quite often that kind of stuff involves Hockey Stick charts and such.  I do know there is a big number in shadow inventory.  I have been reading numbers more in line with 1.5million to 2million in Shadow Inventory and no one seems to really pin-point a number just taking estimates based on late payments.  But 10 million, that is a BIG number!

Any opinions on this?  Do you believe these numbers are for real?  1 in 5 outstanding home loans?  That tells me that the unemployment and under-employment are far bigger problems than we are being told… 

Roughly 10.4 million mortgages, or one in five outstanding home loans in the U.S., will likely default if Congress refuses to implement new policy changes to prevent and sell more foreclosures, according to analyst Laurie Goodman fromAmherst Securities Group….

…”Many analysts looking at the housing problem mistakenly assume it is limited to loans that are currently non-performing (or 60-plus days past due). Such borrowers have a high probability of eventually losing their homes. However, the problem also includes loans with a compromised pay history; these are re-defaulting at a rapid rate,” Goodman told a Senate subcommittee Tuesday.

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The Foreclosure log jam may be open..

RealtyTrac has a good video about the wave of new foreclosures coming down the pipeline. Minnesota has 2,403 New Foreclosures which is running about the middle of the road for the entire nation. Wisconsin posted 3,841 new foreclosures and Illinois posted 12,493 new foreclosures.

Time will tell… The shadow inventory is potentially large, but I am clinging to optimism that Minnesota’s judicial foreclosure system allowed us to clear much of our shadow inventory through short sales quicker than the other states. Which would in part explain why we have suffered some of the largest price declines in the nation to date. 


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