Foreclosure Filings Increase By 21%
mortgagestats | 23 February, 2010 03:13
Foreclosure Filings Increase By 21%
By Jennifer Harmon
A massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog.
Recent data from RealtyTrac showed over 3.9 million foreclosure filings, including default notices, scheduled foreclosure auctions and bank repossession were reported on 2.8 million properties in 2009, up 21% from 2008 and 120% from 2007.
"As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans," said James Saccacio, chief executive officer of RealtyTrac, Irvine, Calif.
"After peaking in July with over 361,000 homes receiving a foreclosure notice, we saw four straight monthly decreases driven primarily by short-term factors: trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline."
Despite all the delays, foreclosure activity still hit a record high for the company's yearend 2009 Foreclosure Market Report, capped off by a substantial increase in December, Mr. Saccacio said.
"In the long term a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog," he added.
More than 10% of Nevada housing units received at least one foreclosure filing in 2009, giving it the nation's highest state foreclosure rate for the third consecutive year. Nevada activity in December increased 27% from November but was still down 22% from December 2008.
Fourth-quarter foreclosure activity in Nevada was down 37% from the previous quarter thanks to substantial decreases in October and November.
Arizona registered the nation's second highest state foreclosure rate in 2009, with more than 6% of its housing units receiving at least one filing during the year, and Florida registered the nation's third highest rate, with 5.93% of its housing units receiving at least one filing in 2009.
Other states with foreclosure rates ranking among the nation's 10 highest were California (4.75%), Utah (2.93%), Idaho (2.72%), Georgia (2.68%), Michigan (2.61%), Illinois (2.5%) and Colorado (2.37%).
California, Florida, Arizona and Illinois accounted for more than 50% of the nation's 2009 total, with more than 1.4 million properties receiving a foreclosure filing.
In California, 632,573 properties received a filing in 2009, up 21% from 2008. Florida reported 516,711 properties with filings, a 34% increase over 2008.
Activity in Arizona included 163,210 properties with a filing in 2009, up 40% from a year earlier.
A total of 131,132 Illinois properties received a filing, an increase of 32% from 2008.
Other states with 2009 totals among the 10 highest in the country were Michigan (118,302), Nevada (112,097), Georgia (106,110), Ohio (101,614), Texas (100,045) and New Jersey (63,208).
Cities in four Sun Belt States accounted for all top 20 foreclosure rates in 2009, but activity spread into prior insulated areas.
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Trackbacks (0)Refinance Volume Muted
mortgagestats | 08 February, 2010 19:35
Refis from Record-Low Rates Muted, But Effect Is 'Not Zero'
By Bonnie Sinnock
Rates continue to fall to never-before-seen lows but this refinancing wave is unlikely to match the size of the one seen when rates last fell to new depths earlier this year.
"The impact is now smaller," said Art Frank, director and head of mortgage-backed securities research at Deutsche Bank Securities. "[Underwriting] standards are tighter and [industry] outreach is diminished."
The Mortgage Bankers Association's refinancing index, a measure of loan application activity, has been around 3000 lately, compared to 6000 when record lows first hit in the spring, he noted. The refi index hasn't even reached 3500 since the beginning of June, he added.
The latest prepayment numbers last Thursday at press time had not been released but Mr. Frank was anticipating only a modest pickup.
He noted that refi-driven prepayment surges in 5 and 5.5 coupons would likely be scarce but the effect of delinquencies on 6s and 6.5s in terms of modifications and buyouts of delinquent loans could be a "bigger concern" in early 2010.
While the effect of recent record-low rates may be less of a driver in the context of prepays than loan performance, and is not expected to be very large, it is "not zero," Mr. Frank noted. (However, where rates are headed - like the prepayment number - was somewhat unknown at the time of this writing. Key employment numbers that could determine that were set for release last Friday after this column went to press.)
As previously noted in this column, rates are expected to rise early next year if the Fed stops buying agency MBS by the end of the first quarter. But other investors are likely to step in as it departs and ensure the rise is a gradual one.
On a recent trip to visit Asian accounts, Mr. Frank said opinions on agency MBS were varied with some continuing to buy while others expressing the opinion spreads have been too tight and have been waiting for spreads to widen out with the Fed's planned departure. For several players, concerns about the future of Fannie Mae and Freddie Mac have "diminished significantly" in contrast to what was seen just before the two agencies were placed into government conservatorship, he said.
For the time being, real estate investment trusts investing in agency MBS may be selectively attractive, according to a equity research report by Sandler O'Neill and Partners LP, which is initiating coverage on the sector.
Even though a rally in the sector may be "running out of steam" it is considered "attractive, particularly for conservative investors seeking to earn low- to mid-teen returns," associate director Michael Taiano and associate Michael Sarcone said in the report.
"We believe the favorable environment will likely continue into next year but are concerned that the hint of a Fed tightening cycle and/or the phase-out of the Fed's MBS purchase program could deflate the stocks' upward momentum in 2010. Consequently, we recommend being selective within the group and buying those REITs that have more balanced models and cheaper valuations," they added.
The company covers six agency mortgage REITs and has "buy" recommendations on two of them: Annaly and Anworth, primarily based on the former's "more diversified and balanced model, along with its track record of managing through various interest rate cycles" and the latter's "more defensive strategy toward higher rates" as well as the fact that "its valuation is the cheapest among the group."
Sandler O'Neill has "hold" recommendations on the other agency mortgage REITs it covers: Capstead, MFA, American Capital Agency Corp. and Hatteras Financial Corp.
In other news, MBS investor Ellington Financial LLC filed a preliminary prospectus for an initial public offering. It is managed and advised by former Kidder Peabody head MBS trader Michael Vranos' Ellington Management Group Inc. Mr. Vranos was raised in Ellington, Conn., and has managed mortgage assets through some challenging market cycles.
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