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Big Bear Foreclosure Numbers – June 2010

Foreclosure filings in Big Bear rose in June 2010, up 25% when compared to May, continuing the zig-zag uncertainty of the Big Bear foreclosure market. Year over year, foreclosure filings were down 12% from the June 2009 numbers, the sixth straight month that foreclosure filings were down year over year.

Notices of sale saw a big spike while notices of default were up modestly.  The number of properties going back to the bank in June was the lowest we’ve seen since February 2009.

Keep in mind, foreclosure filings are made up of three parts – Notices of Default (NOD), a recorded document that starts the foreclosure process, which is normally filed after homeowners fall behind in their payments.  The timing of when the lender files this can vary from the 1 month to over 12 months, depending upon how aggressive they want to be and the new rules they must followNotices of Sale (NOS), a recorded document that is typically filed between 3-6 months after the NOD, which sets the date for the Trustee Sale. Trustee Sales, typically held around 25 days after the NOS is filed, is made up of properties that go back to the bank, generally on the court house steps.

Trustee sales have only three possible outcomes – the property goes back to the bank (which is most common);  the property is bought by a 3rd party, those who buy the properties at the trustee sales instead of it going back to the bank; and properties that are canceled, or pulled from sale.  I generally have not included these last two as they have always been pretty minor in numbers.  The past few months however, I am starting to see an increase in both cancellations and third party sales, so I will start posting this numbers as well.

Here’s how the foreclosure numbers broke down for June 2010.

Notices of Default (NOD) – 54 total, up 23% from May and down 40% from June 2009.

Big drop from the all time highs we saw last year, but still elevated and up month over month.

Notices of Sale (NOS) – 70 total, up 71% from May and up 1% from June 2009.

Very similar to the jump we saw between Sept 09 & Oct 09, and Jan. & Feb. of this year.  It appears that the lenders may be waiting on a loan mod or short to come thru, and once it is determined those are not going to happen, they file the NOS in large numbers.

Trustee Sales – Back to the bank – 21 total, down 32% from May and down 40% from June 2009.

This is the lowest we’ve seen since February 2009. Given the amount NOS, I expect it to shoot back up in July, somewhere in the range of 40 or more.

Trustee Sale – Cancellations

Cancellations have been elevated the past few months, and June 2010 was the first month were the number of cancellations was higher than the number of properties that went back to the bank. The more cancellations, the lower the number of distressed properties that will be hanging on the market.

What are reasons for these cancellations? I know of several – 1. the homeowner cures the defaulted amount; 2. the homeowner modifies their loan; 3. the homeowner completes a short sale; or 4. the lender incorrectly filed the foreclosure paperwork and has to start over.

Trustee Sales – Sold to 3rd Parties

As you can see, the properties being sold to 3rd party buyers at the trustee sales started to increase last fall.  Some of these buyers have bought more than one property as well.

Buying a property at the trustee sale has a lot of risks – has to be a cash purchase, “as is” with no inspections, no title insurance, eviction possibility, etc.  The major reward is the potential to buy a property at well below market value.  To those that have the time, skills and patience, trustee sales can be very lucrative.

Want to see what actually happens at Trustee Sales? Check out the video below.

Direct link to the YouTube video

Foreclosure Inventories In Big Bear (aka the Foreclosure Pipeline)

Feb. 2010 Mar. 2010 April 2010 May 2010 June 2010
Preforeclosure (Notice of Default) 166 187 189 169 169
Auction (Notice of Sale) 192 186 168 167 169
Bank Owned 175 179 167 148 133

This number continues to dwindle lower every month, but there still remains a large amount of Big Bear properties in the foreclosure pipeline – 169 properties have an NOD filed against it, 169 a Notice of Sale, and 133 are currently owned by the Bank. Of those 133 that are bank owned, some are already on the market for sale, some are not, and a small amount have already re-sold to new owners. All in all, month over month, the foreclosure inventory in Big Bear is down 3% from last month.

Why are foreclosure numbers important? In my opinion, they are the most important stat to keep track of as they offer a glimpse into the future of any market. Everyone knows that foreclosures bring prices down in neighborhoods. So, the more foreclosures in an area, the more the downward push on pricing. And, if we want the market/prices to get better, we need to get all of these properties through the foreclosure pipeline first.

Til next month…..

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