Foreclosure filings in Big Bear were down 28% in November 2009 when compared to the previous month. Year over year, foreclosure filings were up 23% from the November 2008 numbers.
Notices of default dropped to the lowest number we’ve seen in a year, while notices of sales and trustee sales back to the bank remained near their monthly average. There are several potential reasons for the drop in defaults – the lull of the holiday season, banks giving borrowers more time and options to resolve the delinquent amount, or less borrowers are getting in trouble. My hope is the third explanation but it is really too early to tell.
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 filed after homeowners fall behind in their payments. Notices of Sale (NOS), a recorded document which is typically filed about 3 months after the NOD, and sets the date for the Trustee Sale. Trustee Sales, properties that go back to the bank or sold to third parties, generally on the court house steps.
Here’s how the foreclosure numbers broke down for November 2009.
Notices of Default (NOD) – 46 total, down 33% from October but up 21% from November 2008.
This was the slowest month for defaults we have seen since last November, which may be a good sign if we continue to see this kind of drop over the next 6 months.
One thing that may skew this number – I’ve noticed some banks are not filing a notice of default even when they should. There’s no real way to track those properties that are delinquent yet the bank has not filed a notice of default. The question is, how many are out there?
Notices of Sale (NOS) – 63 total, down 28% from October but up 26% from November 2008.
This number has zig-zagged up and down the last few months with no true sign of pattern.
Trustee Sales (properties that went back to bank) – 33 total, down 20% from October but up 18% from November 2008.
This is pretty consistent for what we’ve been seeing the whole year, around 40 properties per month in Big Bear are becoming bank owned. These properties will inevitably hit the market for sale over the next 1-2 months, depending upon occupancy and personal property.
What can we expect in the future?
There is still a large amount of properties in foreclosure limbo land. 446 properties are in foreclosure in Big Bear, made up of 233 in pre-foreclosure (notice of default filed) and 213 in auction status (notice of trustee sale filed). Expect most of them to be on the market for sale in the next 6-9 months. It is important to note that the 446 does not include those properties that are bank owned, currently on or off the market, nor does it include homeowners that are delinquent but with no notice of default filed.
It seems as though banks are reluctant to foreclose on these properties, some on purpose and some because of government intervention. Whenever you have that, it screws with the natural markets conditions and is hard to draw any conclusions about the future. Either way, I track and post the foreclosure filings every month so we can get the best idea of what to expect. Once we start to see defaults slow down for a consistent time period, that should be a sign of things to come.