Foreclosure filings in Big Bear dropped in September 2010, down 3% when compared to August, thus again showing the zig-zag movement of the Big Bear foreclosure market. Year over year, foreclosure filings were down 11% from the September 2009 numbers, the ninth straight month that foreclosure filings were down year over year.
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 follow. Notices 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 or auction, 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 (typically investors), 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.
Here’s how the foreclosure numbers broke down for September 2010.
Notices of Default (NOD) – 77 total, up 12% from August and 7% from September 2009.
This is the highest month we’ve seen since August 2009 and the first time this year we’ve seen a year over year increase. Keep in mind, this is the start of the foreclosure process, so the majority of these properties won’t be coming onto the market for close to a year or more given the delays.
Compared to the 3rd quarter of 2009, NOD were down 27% in 2010.
Notices of Sale (NOS) – 54 total, down 4% from August and 9% from September 2009.
This number continues to remain near the yearly average.
Compared to the 3rd quarter of 2009, NOS were down 31% in 2010.
Trustee Sales – Back to the bank – 29 total, down 27% from August and 40% from September 2009.
One of the slower months we’ve seen the past year and well below the 40+ average. I expect this number to remain low as we head into the winter holiday season. Don’t be surprised for it to ramp back up in the beginning of the year however.
Compared to the 3rd quarter of 2009, the number of properties that went back to the back was down 25% this year.
Trustee Sale – Cancellations
Cancellations have been elevated the past 7 months, and the 25 in September followed along the same line. The majority of these cancellation never re-file, so the higher the number, the better for the overall market condition as it is taking distressed properties out of the foreclosure pipeline.
Compared to the 3rd quarter cancellations last year, they are up over 100% this year.
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
Investors picked it back up in September with 6 properties sold to third parties. This number has a direct impact on the properties that go back to the bank as well. The more aggressive the opening bid price at the trustee sales, the more third party sales you will see, and the lower the amount going back to the banks as was evident this past month.
Expect this number to see this number fall in the 1-10 range over the next year or so.
The word is out – sales to third party investors was nearly 200% higher in the 3rd quarter on 2010 as compared to last year. Most of time, these properties will be put back on the market with the investors looking to make a 10-50% return!
Buying a property at the trustee sale has a lot of risks – has to be a cash purchase, “as is” with limited to 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)
|February 2010||March 2010||April 2010||May 2010||June 2010||July 2010||August 2010||Sept 2010|
|Preforeclosure (Notice of Default)||166||187||189||169||169||190||198||205|
|Auction (Notice of Sale)||192||186||168||167||169||156||153||160|
The total amount of Big Bear properties in default rose again in September along those properties with a notice of sale. The total amount of Bank owned properties dropped slightly. 205 properties have an NOD filed against it, 160 a Notice of Sale, and 115 are currently owned by the Bank. Of those 115 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 up 2% 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…..
Thanks – Great Information as always.