Seriously Delinquent Homeowners Undermine Hopes of a Market Recovery

[marmar]

from Minyanville:




Seriously Delinquent Homeowners Undermine Hopes of a Market Recovery
By Keith Jurow May 23, 2011 9:00 am

The percentage of homes with a notice of default, where the owner has not made a payment in more than two years, is now 30% of all defaulted properties.


According to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey released in mid-February of this year, nearly half of all nationwide home purchases in January 2011 involved a distressed property -- either a foreclosed home or a short sale. Their January distressed property index reading of 49.5% was up from 47.2% in December and was the highest level since March of 2010.

This index rose in spite of cutbacks in the sale of repossessed homes last fall by servicing banks because of the robo-signing mess. Short sales continued to climb because most banks finally concluded that it was in their interest to accept a short sale offer rather than go through the time, expense, and complications of foreclosing and then selling the property.

As bad as this distressed property index is, it hides what is going on with the “shadow inventory” about which I have written extensively. Take a look at this amazing chart from Lender Processing Services.



The percentage of homes with a notice of default (NOD) where the owner has not made a payment in more than two years has risen steadily since January 2009. It is now 30% of all defaulted properties. At the end of 2009, it was a mere 10%. Many of them are “walkaways” who have stopped making the mortgage payment in spite of having the financial means to do so. ...........(more)

The complete piece is at: http://www.minyanville.com/businessmarkets/articles/housing-market-delinquent-homeowners-housing-market/5/23/2011/id/34704?camp=featuredslide&medium=home&from=minyanville

[Taverner]

1. Fuckitall...

We need to start a clean slate - give full ownership to those who have paid regularly, and partial ownership to those who can't pay

Then again, I have this strange thing they call a 'conscience' and think that everyone deserves a place to live

[NNN0LHI]

6. No such thing as full ownership to those who have paid regularly or otherwise

By the time we get this house paid for just the yearly property taxes alone broken down monthly will be more than the entire original house payment was which included principal, interest, insurance and property taxes.

Nice to dream though.

Don

[Taverner]

7. Must not live in California then...

Prop 13 changed that. Sure, homeowners loved it - my mom pays property tax on what the price was when she bought it.

However, that also means the State of CA is in budget freefall...take your pick

[NNN0LHI]

8. State budget in freefall or my house being taken away because we can't afford the taxes?

Which one would you pick if you were in my position?

Don

[Taverner]

10. No I agree property taxes can be a bitch

There has to be some middle ground - say a cap on how much property taxes can rise in a given year, instead of an outright freeze at the time or purchase.

[msongs]

2. banks clog the market by refusing to sell repos at market values.....

many people would buy up a lot of these repos if banks would sell them at market values and take the loss, like normal businesses would do. but banks want to hold on to the bitter end and refuse to sell at market rates. our local real estate listing service is full of houses advertised at affordable prices and when you go look at them they tell you the ad price is not valid and smack you with the old price the house sold for at the peak. scammers, many of them

[ejpoeta]

3. how about the homeowners that tried to do the right thing and stick with it

and tried to short sell the house because it wasn't worth what they bought it for but the banks dragged their heels because they had final approval and then the homeowners ended up unable to afford it anymore and defaulted? the banks should have to eat some of this. somehow they end up coming out without losing when they are the ones that loaned money to people who couldn't afford it and in many cases convinced them that they COULD afford it and of course you'll believe it when a banker tells you!!

[louis-t]

4. Wow, I'm in Real Estate and I've never seen that happen.

They're giving them away around here. Short sales still a pain, though.

[Romulox]

9. I'm looking for a new house in SE Michigan. Prices are still way TOO HIGH.

"They're giving them away around here."

Homes are not worth what sellers and agents feel that they "should" be worth. They are worth what buyers are able and willing to pay. The local economy cannot support the current valuations of many of these homes in SE Michigan. :shrug:

[louis-t]

11. Uh, I don't think you know what you're talking about.

Prices have collapsed in this state. People who have lived in their homes 15 years are just breaking even. I'm sorry prices still aren't low enough for you, maybe they'll go down another 10 or 20% and devastate a few hundred thousand more lives. At least YOU'LL be happy.

[Turbineguy]

5. This does not tell the whole story

Banks are not informing people of their options. People are left to wonder why they should pay if they are going to lose it anyway, or? So they don't pay. The banks are hoist on their own petard of fitting people into a model to avoid decision making.

I went through this several times getting mortgages with banks and would tell them, "If you don't think I'll pay the loan, my advice to you is, don't lend me the money!" They are not prepared for this, because their system is arranged to avoid making such judgements.

The problem is that if you avoid making decisions you lose a vital skill.