Bellevue Real Estate » bank owned homes

Distressed Inventory Report 4-9-11

George Thurtle — Wed, 13 Apr 2011 19:06:02 +0000

There is definitely a trend developing. There are very few foreclosed homes; just a net gain of one from the week before. But the number of homes posted with a Notice of Trustee Sale (NTS) is where all the action is and if you take a look at the numbers for West Bellevue you can see there was 10 new properties which went NTS but only a total increase of 4 homes. There is a LOT of churning in the Preforeclosure activity and it looks like lenders are gearing up and getting more proactive to make the short sales happen. Last year you can see the NTS homes pile up and then go to foreclosure; not this year. There is a couple of reasons for this. The conventional one is that lenders are preferring short sales to foreclosure because they do not need to prove ownership of the note in order to have the ability to foreclose. Faulty documentation as noted in a 60 Minutes Documentary is very problematic in the mortgage banking industry. Without proof of ownership of both the Note and Deed of Trust in Washington State the lender has no legal right to foreclose. Some borrowers are becoming savvy to this requirement and are taking advantage of it. Also second lien holders who get wiped out in foreclosure are being much more aggressive in challenging the ability of first lien lenders to foreclose. As a matter of fact there is a home in Lakemont with a Chase first that is having to settle out with a second lien lender because of their challenge regarding Chase’s ability to foreclose. This is being done after the fact after the foreclosure has happened. The result of these requirements is that it is much easier to “release” their interest in title than to prove ownership of the loan documents in order to acquire title through foreclosure. That is the explanation everyone is putting forward for the increased short sale activity.

There is another reason in my opinion and that is monetary. I know of no case where a lender has done better going to foreclosure than doing a short sale. In the early stages of this foreclosure mess the lenders thought they should be “tough” and often turned down short sales at “ridiculous” prices only to take the home back and 18 months to 24 months later finally sell and close the home and receive as much as 50% less. In the meantime they had the cost of ownership and their own internal administration needed to take care of the property etc. so when all was said and done they might have received much less than the net proposed on a short sale. I think this is the real reason. The top managements at these bank tend to be driven by money and see the law and other requirements as not really applying to them and that has not changed. That is why there was an initial movement by the lending community to go to Congress and actually propose legislation which relieved them of their legal obligations to show ownership of the loan. Paper work is something for the “little people”, i.e. the borrower. so expect more short sales but don’t count on the lenders to get those right. In general if you are the third buyer in after two failed attempts on a Chase short sale you will probably get it.

The spreadsheet is here: Bellevue Foreclosure Report 4-9-11

Distressed Inventory Report 4-2-11

George Thurtle — Sat, 09 Apr 2011 22:07:24 +0000

Well the trend of the amount of distressed inventory appearing to be peaking was broken this weak. This week the amount of distressed inventory jumped 15 homes from 311 to 326. However the most notable feature is that there were not many new foreclosed homes but a ton of homes that went Notice of Trustee Sale (NTS). If there was not the present higher sales volumes these numbers would be a lot higher. As an example in zip code 98004 there were 8 new NTS homes but the overall inventory went from 42 to 43. This means a lot of these homes are selling having or having their loans modified and I don’t see much of that happening. The other alternative for the NTS homes to be taken off of the list is foreclosure but those numbers do not appear to be spiking like the NTS numbers although it can take up to two weeks to record the Trustee’s Deed after a foreclosure. The other alternative is that more of these homes are being picked up at foreclosure. The Altos graphs show a small bump in median prices and I suspect we will see that bump level out or cycle on a bottom if the amount of the distressed inventory continues.

The spreadsheedt is here: Bellevue Foreclosure Report 4-2-11

Distressed Inventory Report 3-12-11

George Thurtle — Tue, 15 Mar 2011 14:23:25 +0000

Another downturn this week in the overall amount of distressed inventory. Generally it should be going up but it looks like a lot of things have worked through the system. Overall the amount of distressed inventory (Bank Owned Homes and Notice of Trustee Sales) is at 307. Down from its near term peak of 317 two weeks ago and down from the long term peak of 422 homes in August of 2010. However while it does appear to be leveling off the amount of the drop is not convincing and the overall numbers could be “basing”. It looks like this could be a case of the “muddles” as looks like they could be a new range of of between 300 to 350 homes but lets see.

The listed inventory is also down for both bank owned and short sale. There does not appear to be new listed inventory coming to the market all except for West Bellevue. In that area there were two new homes. The interesting thing about West Bellevue is that the least expensive bank owned home is $1,549,000 and they top out at almost $5,000,000. This is a switch where before the bank owned inventory was at the lower end. Also in South Bellevue a waterfront came on the market at almost $3,000,000 in Kennydale.

The spreadsheet is here: Bellevue Foreclosure Report 3-12-11

Distressed Inventory Report 3-5-11

George Thurtle — Sat, 05 Mar 2011 19:44:59 +0000

An unexpected surprise this week. The overall inventory of distressed homes dropped from 317 to 307. I was expecting a mild increase. In addition like last week there was a lot of turn over in the distressed inventory. As an example in MLS Area 530 there were four new Notices of Trustee Sale (NTS) but the overall inventory for the NTS homes in that area declined from 80 to 74 homes. That is also including seven new NTS homes being added from the week before. As a result in two weeks 11 new NTS homes were added in the East Bellevue Area but there was a net reduction of 6 homes overall from 80 to 74. This means somehow 17 homes were absorbed either through a short sale, foreclosure or loan modification. Given the fact the foreclosure numbers are flat and not rising and I am not seeing inventory crossing over from NTS to bank owned then it appears that short sales and loan modifications must be removing this inventory.

If the distressed inventory keeps being reduced along with the overall inventory then there will be a floor forming under this market in the next couple of weeks. However it usually takes three weeks to establish this trend. That is why I was surpsed this week is that we had 8 weeks of continuing increases in inventory and in addition I felt there was some inventory held back as banks cleaned up their foreclosure practices that this trend would continue at a somewhat slower rate or maybe level off but a drop was not expected.

The spreadsheet is here: Bellevue Foreclosure Report 3-5-11

Distressed Inventory Report 2-5-11

George Thurtle — Sun, 13 Feb 2011 01:45:13 +0000

The numbers are finally climbing like they usually do this time of year. The Notice of Trustee (NTS) sales are up this week and appear not to be dropping or moving around like they have in the last few weeks. Compared to last year there were 244 distressed homes at this time of year but this year there are 290 homes. We are down from the peak of last year of 422 homes but startying from the higher base but the rate of increase is somewhat slower. The next four to six weeks I think will give some indications.

The spreadsheet is here: Bellevue Foreclosure Report 2-5-11

Distressed Inventory Report 1-8-11

George Thurtle — Sun, 16 Jan 2011 02:04:33 +0000

The numbers have started back up. West bellevue had a very large unexplained spike of foreclosed homes withe a jump from 15 to 28 in one week. In addition there was not new offsetting inventory to account for the spike. usually when a spike like this occurs there is a new construction project which has had some condominium units taken back by the bank. Also in Bellevue two new bank owned waterfront homes have come on the market. On eis over $5,000,000 located on Evergreen Point Rd. Will be interesting to see how quick it sells.

The amount of foreclosed inventory usually starts increasing on a seasonal basis this time of year. The big issue in the next month will be how much and how quick. There is a lot of speculation the numbers were down as the banks clean up their foreclosure practices and that now that issue is behind them and there is a pipeline of back up homes to foreclose on and bring to market. The next month will tell.

The spreadsheet is here: Bellevue Foreclosure Report 1-8-11

Distressed Inventory Report 11-27-10

George Thurtle — Tue, 30 Nov 2010 15:29:57 +0000

The amount of bank owned inventory and the publicly recorded notice of trustee sale (NTS) look to be slowly declining. Also in past weeks the inventory which is coming to the market is at the lower end and much of it is in the form of low end condos in older converted apartment buildings. The better newer inventory just keeps declining with situations in which I am seeing multiple offers on better homes at reasonable prices. It is logical that the amount of distressed inventory would begin to stabilize since there has not been a new round of layoffs and employment locally looks to actually be on a mild uptick. With unemployment stabilizing the question is can the consumer keep supporting its overall debt burden. That is what seems to be causing the present round of foreclosures with excessive debt on residences which have no economic value. There is no incentive to support that debt even with a good paying job. You can rent for less each month and not have the burden of the debt. I think in the next two to three years that is what will be driving the distressed inventory market is the consumer looking to rid itself of the crushing debt load due to an ill-timed acquisition.

The spreadsheet is here: Bellevue Foreclosure Report 11-27-10

Distressed Inventory Report 11-20-10

George Thurtle — Sat, 20 Nov 2010 17:32:20 +0000

The numbers have peaked and show a slight decline from the October/early November spike. It was speculated this Spike was the major lenders reviewing their foreclosure practices to make sure they were in compliance. If that is the case the back log was pretty shallow. Also you will see that the NTS inventory is being reduced after a large spike. This would imply steady market activity this week. The distressed inventory available continues to degrade. Of the new NTS inventory only four of them were homes. The other was low end condos in older conversion buildings. In addition the average age of the NTS inventory continues it decline to being older. The new construction inventory now except for a couple of cases is almost all gone and if you survey the MLS most of your new homes are “presale” listings meaning the builder has secured the lot and will only build the home if there is a buyer. You will see this trends continue because of tight credit and the builders who are left are very adverse to market risk.

At the street level I do not see the second wave of ARM resets that everyone was talking about. If the lenders are smart they will reset those rates to more rates and work with those customers. Many of those ARMS will only go into default if they try to bump the rate too much. Those lenders who made the the “Option ARM” loans where a payment rate is set at 1% but the note rate is 7% and the difference accrues to the principle amount should have to eat their own junk. These loans were made to raise the internal rate of the Mortgage Backed Securities. They were nothing but a scam. They were buried in the offerings and constructively manipulated the portfolios to enhance them for sale, i.e. fraud. The investors who bought these things were thought they were getting a higher yield but with very little differential risk. The borrowers who took out the loans thought they would push what they really owed down the road. However the investors and the originators of these loans are a lot smarter and more sophisticated and should bear the brunt of their own greed. Any upper management executive at any lending institution who knew they were offering this type of security should have their bonuses set aside in a reserve fund to pay for the short fall of this junk. That also goes for the securities dealers who sold them and the rating agencies who gave this junk a AAA rating. The lack of personal responsibility by upper management is appalling. Enough of the rant, the spreadsheet is below.

The spreadsheet is here: Bellevue Foreclosure Report 11-20-10

Distressed Inventory Report 11-6-10

George Thurtle — Sat, 06 Nov 2010 17:27:37 +0000

It is evident there was a back log due to the foreclosure moratorium by the major lenders. However this week the nes is that the banks are steeping up the rate of actual foreclosures. Last week the Notice of Trustee sales (NTS) saw a big spike in their numbers, however this week the it is the foreclosures themselves which are increasing. There is still a number of homes going NTS but nat as many as last week. Also there appears to be a lot od churning with at loeast 3 or 4 homes that were NTS being removed and then being replaced. Basically you need almost 5 or 6 new homes going NTS to offset the market and foreclosure activity. Most of the bank owned propoerties however are of a realtively low grade mainly condos and entry level housing. There are some nice newer ones in the 98005 zip code in the Glendale area and some real expensive ones in West Bellevue but that is about it. Aged short sales seem to be presenting the most opportunity right now. Also if any one has any interest I will be listing a new construction and unfinished home in the Kel;sey Glen area but there is no reason an offer cannot be submitted now.

The swpreadsheet is here: Bellevue Foreclosure Report 11-6-10

Distressed Inventory Report 10-30-10

George Thurtle — Fri, 05 Nov 2010 21:19:01 +0000

Well it looks like the foreclsoures are starting again after a lull. As you have read in the news the major lenders stopped processing foreclosures due to documentation difficulties. In the last weeks we were seeing the notices of trustee sales declining and overall it appeared distressed inventory was selling off and being reduced. However this week there is a big jump in the number of homes that have gone NTS (notice of trustee sale). The difficult part to reconcile though is the jump in numbers for the homes going NTS is not matching up with the previous weeks. As an example in the 98004 zip code the number of homes going NTS went from 29 to 60 in one week but it only showed 3 new notices of trustee sales being filed. There could be a couple of reasons for this, the first is that some notices may have been refiled to insure they complied with state law. This would mean some of the servicers processing foreclosure s are trying to clean up their act. The other is that there might have been a large project such as a condo project where the lender was foreclosing on individual units owned by one developer. I will look at the actual NTS filings a little more and see if I can get this figured out. However in the next coup0le of weeks let’s see if these new NTS being filed is clearing out a back log or if we are on an upward spike in new foreclosures.

The spreadsheet is here: Bellevue Foreclosure Report 10-30-10