Foreclosures Are Down? RealtyTrac VP, Daren Blomquist Ė The Definition of Obtuse
Daren Blomquist, a Vice President at RealtyTrac, has proclaimed that we have ‚Äúpast the worst of the foreclosure crisis.‚Äô¬†¬† He points to what he claims to be a five-year low, along with year-over-year decreases in foreclosures for the twenty-fourth consecutive month as the evidence.
The only thing any of this is evidence of is that Mr. Blomquist is thick in the head.
RealtyTrac‚Äôs report, released yesterday, showed, ‚Äúthe combined number of reported default notices, scheduled auctions, and bank repossessions at 180,427 – the lowest total since July 2007.‚ÄĚ¬† ¬†And in case that wasn‚Äôt confusing enough, the company added, ‚ÄúThat’s also 7 percent less than August’ s foreclosure rate, and down 16 percent from September 2011.‚ÄĚ
Does reading those sentences make your hair hurt?¬† I mean, seriously‚Ä¶ doesn‚Äôt it bring on some degree of dizziness?¬† It makes me want to shake someone and scream, ‚ÄúWhat does that mean?¬† What does that mean, damn it?‚ÄĚ
Why can‚Äôt RealtyTrac write cohesive sentences?¬† Okay, so they‚Äôre obviously not English majors, but shouldn‚Äôt they be able to state one thing clearly‚Ä¶ ever?¬† Month after month I end up reading something they‚Äôve said, and I manage to ignore it, but this time I just couldn‚Äôt not say something.
‚ÄúReported default notices, scheduled auctions, and bank repossessions at 180,427¬† – the lowest total since July 2007.‚ÄĚ¬†¬† ‚ÄúReported?‚ÄĚ¬† Do some not report?¬† And banks often don‚Äôt send out default notices for months after one would expect them to, so how meaningful is that number?¬† Scheduled auctions?¬† Are these not reported?¬† And, how many properties might not be ‚Äúscheduled for auction?‚ÄĚ¬† And bank repossessions?¬† So, that‚Äôs only the homes that banks actually took back, right?¬† What about the countless homes that banks haven‚Äôt taken back but are in foreclosure?
Look, can’t everyone see what’s happening here?¬† It’s not the first time we’ve been played with over the last few years.
Today’s Mercury News, a newspaper in the Silicon Valley are of California, had the following dialog going on having to do with the RealtyTrac data and more…
While the drop in foreclosures is good news for struggling homeowners, the declining number this year is partly behind a shortage of homes for sale.
That has been frustrating to investors and first-time home buyers looking for lower-priced homes to buy.
The steep drop — mirrored in California’s foreclosure activity — came as four major banks prepared to implement the standards of a national mortgage settlement.
Okay, so allow me to translate…
The drop in foreclosures started with robo-signing scandal two years ago, was exacerbated by various state laws and court decisions, and in the past six months has been caused by banks getting ready to comply with new servicing standards.
So, if you’ve been wondering why there appear to be so many people all over the country who haven’t made mortgage payments for years and yet are still living in their homes… that’s why.
Because of the slow down in banks’ willingness to foreclose, combined with other factors such as how long it now takes to foreclose as more homeowners resist, and how long it takes to get a foreclosed home back onto the market… there are FEWER LOW PRICED homes available at BELOW MARKET PRICES.
When you have people out there trying to find… no “steal” low priced homes for below market prices, a combination of greed and stupidity causes them to bid against each other, which tends to lift prices of low price homes that were at or even below market.¬† This makes Realtors and mortgage brokers very happy because it reminds them of the good old days when they weren’t scared to death most of the time.
Okay?¬† And then the Mercury News article said the following…
Banks appear to be “in no rush” to foreclose, said Sean O’Toole, the company’s (Foreclosure Radar) CEO.
That can be seen in the large backlog of homes in the foreclosure process, ForeclosureRadar spokeswoman Michelle Lenahan said.
For example, about 5,700 homes in Contra Costa County are in some stage of foreclosure.
If home buyers “are wondering where their inventory is, it’s in all those homes in process but not making it to a trustee sale,” Lenahan said.
Hey now… are you starting to feel me?¬† Banks “in no rush” to foreclose?¬† That doesn’t mean there aren’t plenty of homes to foreclose on, just that they’re not quite ready to proceed full steam ahead.
Even Blomquist admits there are some troubling aspects to the numbers his company reported.
According to Reuter‚Äôs, Blomquist said‚Ä¶
The news is not universally good. Fewer foreclosure starts, said Blomquist, could mean an increase in short sales. Short sales, which take place before a home is formally repossessed, can drag down housing prices by increasing supply.
Still, Blomquist said, short sales are “still the lesser evil: foreclosures tend to sell at even lower prices.”
And thanks you for that explanation of why your reported data might be wrong, and about how short sales work, Mr. Housing Economist.¬† It‚Äôs insight like that, that makes me want to‚Ä¶ rent.
NBC News‚Äô John Schoen agreed that short sales were to blame for the numbers‚Ä¶
‚ÄúThe pace of completed home foreclosures slowed a bit in August nationwide, as banks increasingly turned to¬†so-called short sales to avoid the lengthy process of seizing, maintaining and selling properties.
The wide variation reflects both the regional nature of the housing bust and differing state laws governing the foreclosure process. Some states have passed laws that have slowed the process.
As the pace of home seizures eased, foreclosure starts across the country edged up 1 percent from July, to about 99,000.‚ÄĚ
Then Schoen said‚Ä¶
‚ÄúWhile the pace of foreclosures is expected to continue to decline gradually, that trend won‚Äôt necessarily slow the pace of households losing their homes.‚ÄĚ
I met John Shoen in New York last fall and I liked him well enough.¬† But I cannot figure out for the life of me what that sentence means.¬† Waiter, check please?
But Baron Von Blomquist’s words change depending on the article you read.¬† For example, NPR covered RealtyTrac’s report too, but Devin sang a slightly different tune in that article…
Unfortunately, the news is not as rosy as it seems. RealtyTrac Vice President Daren Blomquist warns new regions that haven’t struggled as much with foreclosures in the past are now seeing a wave of problems:
“Several states where the foreclosure flow was not so dammed up last year could see a roller-coaster pattern in foreclosure activity going forward because of recent legislation or court rulings that substantively change the rules to properly foreclose. A backlog of delayed foreclosures will likely build up in those states as lenders adjust to the new rules, with many of those delayed foreclosures eventually hitting down the road.”
Reuters also reported what the Blommeister had to say about the impact of the length of time it was taking to foreclose‚Ä¶
The average number of days it took lenders to foreclose hit a record 382 days overall.
“Much of the downward trend is good news, but part of it is exaggerated by the fact that it’s taking longer to foreclose, which automatically reduces the foreclosure numbers,” said Blomquist.
Yeah, I‚Äôll say part of it is exaggerated, the question is which part and how many parts.¬† And ‚Äúmuch‚ÄĚ of the downward trend is good news?¬† ‚ÄúMuch‚ÄĚ of it?¬† We went from throwing around numbers and comparative statistics to ‚Äúmuch‚ÄĚ of it being good news?
How ‚Äúmuch,‚ÄĚ is ‚Äúmuch,‚ÄĚ Professor Blomquist?¬† Thirty percent?¬† Forty?¬† Is that what ‚Äúmuch‚ÄĚ means?¬† It can‚Äôt be more than half, right?¬† More than half would be ‚Äúmost,‚ÄĚ not ‚Äúmuch,‚ÄĚ right?
I‚Äôm getting a stomach ache.
Now, we all know that for the last 24 months plus, foreclosures have been slowing, or on hold would be a better way of phrasing it.¬† Hardly anyone has foreclosed in Nevada since the law making robo-signing a crime went into effect over a year ago.¬† New Jersey is another state where foreclosures have been waiting for a variety of reasons.
Just a few days ago, as a matter of fact, on NewJersey.com, the headline read: ‚ÄúDire foreclosure estimate for NJ by New York Fed.‚ÄĚ¬† Apparently, In New Jersey, ‚Äúresidential foreclosures tend to crawl through the court system, taking more than 900 days on average, said John McWeeney, president of the New Jersey Bankers Association.‚ÄĚ¬† (I know what you’re thinking, but that’s his name, I swear.¬† Click the link, you’ll see.¬† And I’m far too dignified to make fun of a McWeeny… I mean a name like McWeeney… yes indeed… far too dignified.)
But… Wow‚Ä¶ 900 days ON AVERAGE to foreclose?¬† So, that would have to mean that there are quite a few taking much longer‚Ä¶ like some at 1800 days?¬† Five years?¬† No kidding.¬† Five years without a mortgage payment is almost worth it, don’t you think?¬† I’m not suggesting anyone try it, but damn… that’s a couple hundred grand in your pocket.¬† That’s one way to get your equity back.
The point being made by the NY Fed, was that‚Ä¶
‚ÄúIf the average number of days it takes to foreclose on a property declines, for example, lenders’ repossessions ‚Äėwould rise sharply in most states, tripling in New York and more than doubling in New Jersey,‚Äô the study performed for the New York Fed by CoreLogic said.‚ÄĚ
‚ÄúTripling and doubling,‚ÄĚ Mr. Blomquist?¬† Is that what you meant when you said we had ‚Äúpast the worst of the foreclosure crisis?‚ÄĚ
NewJersey.com explained the slowing of foreclosures over the past 24 months in simple terms‚Ä¶
‚ÄúQuestions over banks “robo-signing” documents ‚ÄĒ signing them without verifying their accuracy ‚ÄĒ slowed the foreclosure process last year. But banks have reached settlements with the government and amended their procedures.‚ÄĚ
So, does that mean we should assume that the average number of days that it takes to foreclose is now going to decrease?¬† Or, is the answer no‚Ä¶ because new state laws making foreclosure more difficult are going to force servicers to foreclose judicially?
But, will judicial foreclosures take more or less time when compared with the roadblocks being thrown in the way by homeowners and various state legislatures?¬† For example, what happens if a bunch of the 26 states said to be looking at California‚Äôs Homeowner Bill of Rights end up passing such legislation next season?¬† What will that do to the average number of days it takes to foreclose?
And what about the incidence of strategic defaults potentially increasing as housing stays in its current, slowly deteriorating state?¬† Or, what will happen as states reduce spending and increase taxes over the next two years as they struggle to contend with state budget deficits that won‚Äôt otherwise close?¬† Won’t that mean fewer jobs?¬† What will that do to foreclosures?
Does RealtyTrac have any answers to these questions, Dimward?
And the Reuters article also included the following data from the RealtyTrac September report.‚Ä¶
‚ÄúOnly four states with non-judicial foreclosure rules registered an increase in activity in the third quarter.¬† Washington state saw a 70 percent increase from the previous quarter, and was up 15 percent from the third quarter of 2011.‚ÄĚ
An increase in ‚Äúactivity?‚ÄĚ¬† What kind of ‚Äúactivity,‚ÄĚ Derwood?¬† Was it an increase in the number of people just milling about aimlessly?¬† No, it had to be foreclosure activity, I would think‚Ä¶ but what the heck does that mean?¬† How come you didn‚Äôt reference anything else in terms of ‚Äúactivity?‚ÄĚ
And although what’s-his-name didn’t mention it, I happened to catch this headline on this very morning… “South Carolina foreclosure activity jumps 33%”¬† So, what’s up with all the activity in South Carolina?
And the Reuters article closed with the following‚Ä¶
‚ÄúFlorida, a judicial state, ranked highest in the nation in September and the third quarter for the first time since 2005.¬† One in 117 Florida housing units had a foreclosure filing in the third quarter, more than twice the national average of one in 248 housing units.‚ÄĚ
So, what are we to take from that piece of news?¬† Florida is judicial, so one would imagine it would be taking a longer time to foreclose‚Ä¶ or not.¬† I really have no idea.¬† But, it ranked that highly for the first time since 2005?¬† That‚Äôs somewhat striking, isn‚Äôt it, Dunbin?
NewJersey.com explained it pretty clearly‚Ä¶
If the average time it takes to foreclose in New Jersey increases in the coming months, the backlog of foreclosed homes in the pipeline is such that the number of repossessions would still rise substantially, by an estimated 49 percent, according to the New York Fed report. On the other hand, if the duration decreases, the number of repossessed properties may climb 140 percent.
“That sounds accurate,” said McWeeney.
Actually that sounds positively terrifying, if you ask me.¬† That is one scary McWeeney, let me tell you.¬† (What?¬† Don’t look at me like that.¬† You laughed too, I know you did.)
Dagwood then said‚Ä¶
“A longer process means a bit less pain in the short-term, but it means it takes longer for the housing market to fully rid itself of the foreclosure albatross.”
‚ÄúThe foreclosure albatross?‚ÄĚ¬† Why Daren Blomquist‚Ä¶ you odious, officious, and insensitive little prick you.
Does your mother know you talk like that about people‚Ä¶ families‚Ä¶ senior citizens‚Ä¶ working parents struggling through the worst economic downturn since the 1930s‚Ä¶ a situation caused by, let‚Äôs face it, a handful of sleazy, predatory sub-prime pond scum and their Wall Street equivalent, Lehman Bros. et al, that finally managed to break the global credit markets leaving the entire planet to suffer through their governments‚Äô mishandling of the crisis as years of life expectancy were undoubtedly deducted from their totals.
Just this evening, a father in New Jersey with two young children who are very sick, and until this crisis earned over $150k a year and had an 820 FICO score, but is now facing foreclosure with nowhere to go, told me how he has felt like a failure in front of his family and how scared he is about the future for all of us‚Ä¶
And you would characterize what‚Äôs he’s going through as getting ‚Äúrid of the foreclosure albatross?‚ÄĚ
Good Lord, Mr. Blomquist‚Ä¶ have you no decency, sir?
I am done with you.¬† You may go now.¬† (CLICK.)
Bye bye, Darwood.
Okay, so look‚Ä¶ I can‚Äôt find one person related to the real estate or mortgage industries, mainstream media, academia or government that‚Äôs been right even one time having to do with the foreclosure crisis.
Sheila Bair, who was by far the best on our financial crisis leadership team, in her new book, ‚ÄúBull by the Horns,‚ÄĚ which I‚Äôll be reviewing next week, explains how no one wanted to do anything for homeowners‚Ä¶ it was save the banks and they‚Äôll save the rest of us, which may just be the most ridiculous idea I‚Äôve ever heard.
When you underestimate things every single time for six years, at what point should we ignore you?¬† I wonder what these people would tell their own children about the answer to that question.
Here‚Äôs what they continue to overlook‚Ä¶ I mean, besides market fundamentals like uber-tight lending criteria, no possibility for increased demand, no private lending because of a destroyed market for private securitizations, aging boomers moving and buying less and less, unbelievable amounts of student loan debt weighing down the only people in our society with the potential to generate economic growth, and a populace that likely will never borrow again at anywhere near the rate they have over the last 30 years‚Ä¶ you know‚Ä¶ besides stuff like that.
What everyone continues to overlook is the impact that foreclosures continue to have on new foreclosures.¬† We‚Äôve got supposed experts yammering about how we‚Äôll have some set number of foreclosures and then we‚Äôll be through this mess.
But that‚Äôs just not how this works.¬† Foreclosures breed new foreclosures because they force down housing prices, which means more people go underwater.¬† And once underwater, life events cause foreclosures‚Ä¶ things like divorce, illness, injury and job loss‚Ä¶ you know‚Ä¶ the bad stuff that happens in life… to ALL of us, if we live long enough.
Is there a plan to stop life events from happening?¬† Because if that‚Äôs the case, then shave my head and call me baldy, ‚Äėcause I‚Äôm dead flat wrong about most everything.
And about this underwater thing‚Ä¶ I keep hearing about how it‚Äôs 30 percent of homeowners that are underwater.¬† Even as I keep seeing how home prices continue to fall on a price per square foot basis.¬† And I‚Äôm talking about in populated places like Connecticut.¬† How come the underwater number never changes?
In addition to that, no one is selling their home, right?¬† I mean, not only the people underwater who can‚Äôt sell, but I mean the rest of homeowners too.¬† It‚Äôs easy to see why that would be, of course.
‚ÄúHey, honey‚Ä¶ now seems like a good time to put Case del Johnson on the old market, doesn‚Äôt it?¬† Come on‚Ä¶ it‚Äôll be fun‚Ä¶ we can compete with the 11 short sales going on in the neighborhood.¬† Why would we want to stay here in our comfortable home we can afford?¬† Let‚Äôs live a little‚Ä¶ see if we can get approved for an even larger loan amount at an even lower rate than the 4 percent we‚Äôre currently paying.‚ÄĚ
Know anyone having that sort of conversation these days?¬† Yeah‚Ä¶ me either.¬† I spoke with a Realtor in Phoenix who confirmed what I thought‚Ä¶ the only people he‚Äôs listing that aren‚Äôt distressed are over 70 years old.¬† Yep, makes all the sense in the world.
So, if the people who aren‚Äôt selling started to sell, would that make prices go up or down?¬† Increased supply, without any increase in demand does what to prices?¬† I’m not telling you, you have to guess.
So, once again‚Ä¶ what percentage of homeowners are underwater?¬† We don‚Äôt really know, now do we?¬† Sixty percent in Arizona.¬† How about we start taking states like North Dakota out of the national average, what do you suppose that would do to the underwater stats?
Thirty percent my Aunt Fannie.¬† If you want to know about future foreclosures, you could ask an actuary at an insurance company how many divorces, injuries and illnesses will impact our population each year going forward, and then find out where they‚Äôre concentrated in terms of geography and overlay that against the population with underwater mortgages.
I don‚Äôt know‚Ä¶ I‚Äôd have to think about it.¬† But I do know this‚Ä¶ I never hear anyone from the industry talking about any of those factors, and I know that‚Äôs just not correct.¬† So, it‚Äôs no surprise that neither are they‚Ä¶ ever.