November Foreclosure Sales and Filings Impacted by Holidays
Discovery Bay, CA, December 15, 2009 - PropertyRadar (www.foreclosureradar.com), the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for November 2009. Despite apparent headline month-over-month declines in foreclosure activity, the real story requires looking at changes in the average daily activity. November had only 18 days on which filings could be recorded or trustee sales held because of fewer days in the month, Veterans Day and the Thanksgiving Holiday, while October had 22 recording days and 21 trustee sale days. After adjusting for this difference in days we find little month-over-month change in the statistics, with the exception of Notices of Trustee Sale which declined 13.4 percent, Cancellations which rose 40.0 percent, and Sales to 3rd Parties which rose 8.0 percent on a daily average basis."We've been waiting to see some impact from the Home Affordable Modification Program," says Sean O'Toole, Founder, and CEO of PropertyRadar.com. "The 40 percent increase in cancellations this month is likely just the beginning of what we expect will be a wave of cancellations under this program".
Notice of Default
Prior MonthPrior Year-18.98%35.41%
Notice of Trustee Sale
Prior MonthPrior Year29.14%-4.03%
It is important to recognize that the decline in Foreclosure Filings is primarily due to a difference in the number of days documents can be recorded month-over-month and not fewer filings each day. With just 18 recording days in November versus 22 in October, average daily filings of Notices of Default only declined 1 percent, while Notices of Trustee Sale declined 13.4 percent from the prior month.
Back to Bank (REO)
Prior MonthPrior Year12.20%-7.52%
Prior MonthPrior Year19.77%26.10%
Sold to 3rd Party
Prior MonthPrior Year-7.43%286.13%
Like Filings, Foreclosure Outcomes have to be looked at on a daily average basis to understand the month-over-month differences. When that is done, we see that Bank-Owned properties increased 2.4 percent, and Sold to 3rd Party increased 8.0 percent on a daily average basis from the prior month.
Perhaps most significant is the 40.0 percent month-over-month increase in daily average Cancellations when viewed on a daily average basis. This is especially notable as the Obama Administration announced a new campaign this month to convert trial loan modifications to permanent modifications. This is important because properties remain in foreclosure during the trial period, and are only canceled once the modification becomes permanent. We've therefore been watching sales and cancellations closely looking for either a rise in foreclosure sales as modifications fail or a rise in cancellations if they become permanent. This month's rise in cancellations is in line with recent Administration reports that 31,382 of the 728.408 trial modifications became permanent. And given their new conversion drive, further cancellations are likely.
Scheduled for Sale
Prior MonthPrior Year1.42%135.96%
Bank Owned (REO)
Prior MonthPrior Year0.04%-39.42%
Despite the significant drop in filings of new Notices of Trustee Sale and an increase in the number of Cancellations, the number of foreclosures Scheduled for Sale still rose. The simple reality is that homeowners are continuing to enter foreclosure faster than they are coming out. This will likely continue until we see meaningful progress on loan modifications, or the often predicted "foreclosure wave" finally occurs.
Resale of Bank Owned (REO) homes declined in November, but so too did the number of homes that banks took back at auction, leaving inventories flat month-over-month.
The discounts received by 3rd party investors at the courthouse steps increased to 19.9 percent below market value, from the prior months 17.9 percent below.
Foreclosure Sales by Loan Origination Date
Despite prices now well below 2004 levels in many areas, loans made in 2004 and earlier remain a very small percentage of foreclosures.