Early Improvements Slowed by Scandal and Fewer Loan Mods and Short Sales
The first half of 2010 saw relatively good news for most participants in the foreclosure market. Foreclosure cancellations rose as homeowners saw more short sales and loan modifications approved. Investors quickly flipped their foreclosure purchases for solid profits as buyers hurried to take advantage of tax credits. As the tax credits expired, however, the market began to slow. Foreclosure cancellations also began to drop as the government push for loan modifications waned and short sales slowed with the rest of the housing market. Finally, in the beginning of the third quarter, the robo-signing scandal led to dramatically lower foreclosure sales, including a complete halt by Bank of America for nearly two months.
Foreclosure Starts 2007-2010
For the first time since the foreclosure crisis began, Arizona, California, and Nevada saw a drop in the filing of new foreclosure actions. Oregon and Washington, however, continued to climb, but with much lower percentage increases than the prior 2 years.
Foreclosure Starts represent: Notice of Default filings in CA, NV and OR; Notice of Trustee Sale filings in AZ and WA.
Foreclosure Sales 2007-2010
Foreclosure sales dropped in 2010 for the first time in Arizona and Nevada. California dropped for the second year in a row, while Oregon and Washington both saw increased foreclosure sales.
Foreclosure Sales is based on auction sales either back to the bank or to a 3rd party. Numbers based on auction results excpet for 2007 to 2009 for states other than CA where we counted the filing of trustees deeds.
|February 2005||Fed Chairman Alan Greenspan tells the US House Financial Services Committes that: “I don’t expect that we will run into anything resembling a collapsing [housing] bubble.”|
|February 2006||Fed Chairman Ben Bernanke says, “Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise, but not at the pace that they had been rising.”|
|May 2007||Fed Chairman Ben Bernanke says, “We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”|
|July 2008||The Housing Economic Recovery Act is signed into law. Clearly too little, too late.|
|September 2008||Fannie Mae and Freddie Mac are put into conservatorship by the US Treasury as concerns about their ability to raise capital and debt threaten to disrupt the US housing and financial markets.|
|September 2008||Treasury Secretary Henry Paulson announces the Troubled Assets Relief Program (TARP). Though in the end troubled assets were largely purchased by the Fed rather than through TARP, it signaled the beginning of significant government intervention into the foreclosure market.|
|September 2008||CA Senate Bill 1137 goes into affect. While intended to slow foreclosures and increase loan modifications, it accomplished little more than foreclosure delays.|
|February 2009||The American Recovery and Reinvestment Act offers tax credit for first-time homebuyers, which is later extended to April 2010 and expanded to include repeat buyers. Like cash-for-clunkers it provides short-term stimulus to the housing market.|
|March 2009||Obama Administration announces “Making Home Affordable” loan modification program (HAMP), creating the most exotic mortgage ever offered, and lawmakers request a voluntary foreclosure moratorium pending implementation.|
|April 2009||Financial Accounting Standards Board approves mark-to-model for mortgage-backed securities creating incentives for lenders to sit on bad loans rather than foreclose or approve short sales or loan modifications.|
|May 2009||The “Helping Families Save Their Homes Act of 2009” provides renters impacted by foreclosure with additional protections.|
|December 2009||Nationwide campaign to push the The Home Affordable Modification Program(HAMP) continues an artificial delay of foreclosures, but ultimately helps only a few.|
|April 2010||Home Affordable Foreclosure Alternatives (HAFA) promotes short sales and deeds-in-lieu of foreclosure, but has little impact beyond delaying the inevitable.|
|October 2010||Robo-signing scandal over documentation issues in judicial foreclosure filings leads to nationwide delays in foreclosure sales.|