Tag Archives: Foreclosures

Foreclosures in Greenwich

I just checked a service I subscribe to for foreclosures initiated in December ’09. There are 11. I know the houses and at least ten of them (the 11th is a builder’s lien being foreclosed) are not only being foreclosed on by the primary lender but none is worth the amount of that mortgage and all have two, three and even four loans encumbering the property. In short, these people are f****d and will not be coming back above water.

That’s just houses coming into the foreclosure arena last month. Draw whatever conclusion you like, but I don’t think you should count on any rebound in prices soon.

UPDATE: 219 foreclosures were started in all of 2009.  That number includes duplicates, where second and third lien holders pile on, but if you figure that there are 150 houses under foreclosure right now, plus the 2007 and 2008 crop (the process takes a long time) I think you’d be in the ballpark. That’s a lot of inventory.


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More movement?

Perhaps – my memory has let me down on #9 “The Avenue” up Bedford way, reported as under contract (asking $1.095) today. There’s at least one foreclosure pending on that street and if this is it, then we’re witnessing death throes, not market life. But there are at least two houses for sale on that street so maybe not.

Similarly, 98 Hillcrest Road is reported under contract today but I thought it had enjoyed that status since early November. Did the first deal fall through? Is it just being reported again for jollies? Who knows? Anyway, it’s no longer available.

And, while not actively listed, 1 Ford Lane Tomac Lane went back to the lender December 5th – next step, a few months from now, will be an auction. We’d been working on this but couldn’t get the parties together before time ran out, unfortunately.

30 Crescent Lane, taken over by its lender in August, is still not available for sale – the former owner is holding on and has tied things up in court, claiming a tenant’s status. I don’t blame the man at all – when you have nowhere to go, you don’t voluntarily shove off into the night because some bank asks you to. But eventually, he’ll lose – times are not good out there.


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Two more years of residential foreclosures?

That’s what Housing Wire predicts.

“You’re moving from Phoenix to Prescott, you’re moving from Las Vegas to Reno,” Rick Sharga, the vice president of marketing at RealtyTrac, told HousingWire. “You are seeing that migration into secondary markets. You’re also seeing a migration into formerly stable areas and areas that have been wracked by unemployment.”

Cities in California, Florida and Nevada accounted for the 10 highest foreclosure rates in Q309 among metro areas with more than 200,000 people. However, five of those cities reported decreasing foreclosure activity from Q308, offset by many other markets reporting spikes in foreclosures, according to the report.

Sharga sees the foreclosure crisis coming in three waves, and with this new data, the market is showing signs of the second one.

“That first wave of foreclosures cratered the economy, which created job losses, which created the second wave. Now, we’re seeing prime rate loans affected by unemployment. And the third wave will be really a repeat of wave one, except this time we’re going to see a switch of Option ARM and Alt-A loans out for the subprime loans. It will probably be as big but somewhat shorter lived,” Sharga said.

Sharga said that he expects a peak in foreclosures in 2010, only a marginal improvement in 2011 and a return to normal monthly foreclosure activity sometime in 2012.

“Rising unemployment and a new variety of mortgage resets continued to gradually shift the nation’s foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave,” said James J. Saccacio, chief executive officer of RealtyTrac. “While toxic subprime mortgages drove much of that first wave of foreclosures, high unemployment and exotic Alt-A Option ARMs are spreading the foreclosure flood to more metro areas in 2009.”

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And guess what? An $8,000 buyers credit isn’t even a rounding error in our market

Here’s a cheery chart. Especially in Greenwich, where we have almost no new houses selling but plenty of foreclosures brewing.

Foreclosures vs. new home sales

Foreclosures vs. new home sales

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There were at least 14 lis pendens announcing commencement of foreclosure proceedings filed yesterday – I say at least 14, because I was only looking for properties that clients of mine might find of interest. I won’t say which those are – I take care of my clients first – but 29 Byfield Road, that huge spec project, seems to be under the gun before it’s even finished. There are a couple on Sunshine that aren’t doing well and we can probably guess why that poor bastard on Stanwich committed suicide a few weeks ago, too. Sad times.

One note to the owners of Druid Lane: if you want to delay things, have your lawyer check the notice of lis pendens. It recites that the property is “in the County of New London”. Probably not fatal, since they did manage to record it in the right place, but it’s probably worth a month of delay while your lawyer asserts the claim of improper service and loses.


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This doesn’t seem to be working so well

Fanie Mae “Home-Saver” rescue plan hits 70% foreclosure rate. I doubt anyone in Washington is too worried about this. The point of all our welfare programs is not that they don’t work – we’ve known that at least since the failure of the War on Poverty – but whether our intentions are good. And what demonstrates a good intention better than confiscating billions of dollars from one group of citizens and bestowing it on another?

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Foreclosures resume

After laying off for awhile to see what Obama had to offer in the way of bailouts for homeowners, the major lenders have concluded, “nothing” and started in again foreclosing homes.  Fannie Mae, Wells Fargo and Chase have all resumed pushing foreclosures through the pipeline. Which will reduce prices but start restoring some sanity to the market.

Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels. More than 2.1 million homes will be lost this year because borrowers can’t meet their loan payments, up from about 1.7 million in 2008, according to Moody’s Economy.com.

I won’t be at all surprised to see Mr. Temple join me in the principal’s office tomorrow morning. What a pessimist!

UPDATE: Sheesh, here’s another spoilsport!

New York Area Home Prices to Fall 15%, Rosen Says By Dan Levy

April 14 (Bloomberg) — Home prices in the New York City metropolitan area will fall as much as 15 percent as Wall Street firms cut jobs and slash bonuses, according to Kenneth Rosen, an economist at the University of California, Berkeley.

Luxury vacation markets such as the Hamptons on the east end of Long Island, New York; Lake Tahoe in California; and Aspen, Colorado will also suffer as the recession deepens, said Rosen, chairman of the Fisher Center for Real Estate and Urban Economics. Prices may fall 20 percent in those areas.

“These declines are happening but aren’t showing up in the data yet,” Rosen said in an interview. “Any place hit by the financial crisis will have substantial declines.”

The S&P/Case-Shiller index of prices in 20 U.S. cities fell 19 percent in January from a year earlier, the biggest drop on record. New foreclosures, a glut of unsold homes and eroding household wealth are driving down prices amid the worst housing crisis since the 1930s. The U.S. economy shed 663,000 jobs last month and the unemployment rate rose to a 25-year high of 8.5 percent, according to the Labor Department.

In New York City, apartment prices fell 19 percent in the first quarter from a year earlier to an average $805,000, the Real Estate Board of New York said last week.

Rising Unemployment

City Comptroller William Thompson predicted in March that 250,000 jobs would be lost in the five boroughs before the recession ends. New York City’s unemployment rate rose to 8.1 percent in February from 6.9 percent in January, a record month- to-month increase, according to the state Labor Department.

Across the U.S., Rosen predicted house prices will fall another 7 percent, with parts of California, Florida, Nevada and Arizona posting additional declines of as much as 15 percent as those states absorb record foreclosures.

The housing market’s cumulative price drop from peak to trough will be 25 percent with, a “bottoming” period that begins this year and may last two years, Rosen said.

“Job losses are large and the foreclosure inventory is rising,” said Rosen, who also runs Rosen Real Estate Securities LLC in Berkeley, a hedge fund with about $300 million in assets. “It’s going to get worse before it gets better, even with the best government efforts.”



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Foreclosures and short sales

I attended a packed meeting of realtors and lawyers this morning on the subject of mortgage foreclosures and short sales. A foreclosure, whether by auction of “strict”, where the borrower’s right of redemption is judicially extinguished, ends up with full title in the bank. A short sale happens when the owner sells to a buyer full title to the property, with the bank signing on for less than it’s owed. Either way, the borrower/owner loses his house, but what are you going to do?

There was talk of a mortgage mediation program, on which I’ll write later. Of interest for now is that mortgage foreclosures have doubled the past year, with no end in sight. And short sales? As Gene Marconi, chief counsel for the Connecticut Association of Realtors said, “I grew up in Torrington and cut my teeth on short sales. never, not once in my career, did I ever think I’d be here in Greenwich discussing short sales.” Well now he is. There are some interesting opportunities for buyers out there, and more coming each day.

And as an aside, before I receive any more angry comments deploring bottom feeders profiting on other’s misery, please read this Bloomberg article on cash-rich companies swallowing their weaker competitors whole. IBM, for instance, is bidding for Sun Microsystems.

March 18 (Bloomberg) — U.S. mergers and acquisitions may stage an unexpected recovery as International Business Machines Corp. and companies with cash prey on rivals struggling with depressed stock prices, bankers and lawyers said.

“Clearly this is the time to make an acquisition if you are a company that has the cash,” said Frank Aquila, a partner at Sullivan & Cromwell LLP in New York. “The best returns have come from acquisitions done during an economic downturn.”

It’s not nice, but if you’re solvent when much of the world isn’t, why not take advantage of your good fortune?


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Bank Foreclosures in La La Land

No, not California, but everywhere that housing prices are falling. This article points out that banks buy their own foreclosed houses for what they’re owed, then carry them on the books at at least that value, if not a bit more. Welcome to the land of toxic assets.

A good local example of this is the recent foreclosure auction on Round Hill Road (414? I forget – the land and tear-down behind Round Hill Community Church, once owned by Robert Weiss). Seven indivisible acres with a house riddled with mold, the bank was owed $3.9 million and I believe that’s what they bid. I don’t think the land is worth anything like that – very nice property, but in this market, if I were a guessing man, I’d say somewhere between $2.7 and $3.3 ought to take it. If I’m right, there’s as asset on that bank’s books that’s being carried for at least $700,000 more than it’s worth. If I’m right. Here’s a portion of the article I link to – don’t miss the paragraph, “Dislocation Ideology” – it sums up what’s happening here, in my opinion.

Dropping Prices Mean Hidden Losses Mount.  The bank’s purchase of the house may have put a floor on the immediate losses from the mortgage default but it doesn’t stop housing prices from dropping. If the housing market continues to deteriorate, the house now owned by the bank could be worth even less. The bank bought the house for $175K and booked it at $190K. But the market value of the house could be far less. If the value of the house drops to $150K, the bank is sitting on unrealized losses of 25% but has only booked a 5% loss.

How To Invent A Toxic Asset.
Let’s conclude with the idea that this is exactly how a toxic asset is created. A bank buys something and books it at a value that winds up being far higher than the market value. It can’t sell the asset without realizing horrific losses. Investors and creditors of the bank know that it is holding these things at far above their real value, however, and discount the credit worthiness and profitability of the bank accordingly.

Dislocation Ideology.
All of this is made possible by one thing: an ideological conviction that the national housing slump should have been impossible and therefore that housing prices are sure to recover shortly. That’s what we call the “Dislocation Ideology”–the idea that housing markets are temporarily dislocated and will soon find themselves back on the old path onward and upward.

If a long term downturn were acknowledged, a conservative bank would avoid buying foreclosed houses and prefer to take the losses up-front, letting the outside buyers pick up the home and the downside risk of further price slides. But banks are still long housing, so they keep buying houses and booking them at inflated values.


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Where’s there’s a tragedy, there’s someone to take advantage of it

No, not this blog (well, only sometimes). I’m talking about mortgage rescue frauds – companies that, for a fee, promise to help you resolve your difficulties with your lender. Surprise surprise, they often take your money and disappear. Now our intrepid Attorney General wants to do something about it. I rather doubt that we need new regulations to fight a new variation of fraud but the politician’s alarm should alert you that, if you’re having financial trouble, an attorney or an accountant is probably a better source of help than a firm you find in the yellow pages.

Hat tip: Krazy Kat

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