Lender Processing Services has released a market report showing a substantial increase in the rate and number of defaults nationwide. The report showed a 21.3% increase in the number of delinquent loans in February of 2010 when compared to February of 2009. February’s foreclosure rate of 3.31% represented a 51.1% year over year increase. While the report showed a 1.45% decrease when compared to January of 2010, the national delinquency rate stood still at 10.2%.
Climbing Foreclosures February 2010
Additionally, the percentage of new problem loans is at its highest in five years. More than 1.1 million loans that were current at the beginning of January 2010 were at least 30 days delinquent or more by the end of February 2010. This may be an indicator of an increase in ARM and ALTA loan products adjusting.
According to the market report, the number of non-current first position mortgages and REO properties total more than 7.9 million loans. Delinquencies and foreclosure inventories remain high due to the sheer volume of problem loans in conjunction with prolonged loss mitgation efforts and foreclosure moratoria.
The states with the most non-current loans include: Florida, Nevada, Arizona, Mississippi, California, New Jersey, Georgia, Illinois, Ohio, and Indiana.
The states with fewest non-current loans are: North Dakota, South Dakota, Alaska, Wyoming, Nebraska, Montana, Vermont, Colorado, Washington, and Minnesota.
According to one Freddie Mac official, “The current large backlog of seriously delinquent mortgages remains a daunting prospect for many local markets across the country, and it may take two years or more to return to more normal housing market conditions.”
The Los Angeles Short Sale market is reflective of these national trends. Due to the high levels of unemployment in Los Angeles and the current economic downturn, the number of short sales and foreclosures continue to grow. Loss mitigation efforts, whether they be loan modifications or short sales, typically drag the process out for months. When you take in to consideration the increase of ARM and ALTA loan products adjusting, the typical lengthy process of loss mitigation, and the high rate of unemployment, to this author, the forecast of a two year window before recovery seems optimistic.
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L.A. is no exception! It’s as if we should have seen it coming. The short sale process has been wrought with fraud and has helped beat down the market at the expense of homeowners. You can see how real estate has been devalued, while banks have retained and even recapitalized. The real estate market has been nothing short of turbulent since the start of this effort. You can do any type of analysis and you are still left out of the deal, even if your offer is in excess of values and trends you can find if your efer to the National Association of Realtors median home sales map, follow indeces such as Sell My Home and Zillow for data tracking purposes, or simply by checking out your local open houses. Your best bet in the short sale process is to go after as many deals as you can and hape you are somewhere in the price rance you are expecting. It may be over what you originally wanted to pay, but this is what all signs point to in such an environment.