Given that pretty much every bank postponed foreclosure activity for the holidays, a decline in actual repossessions was expected. However, we were not expecting the dramatic drop in Notices of Default filed.
From ForeclosureRadar: Banks cancel more foreclosures then they sell for first time
Foreclosure activity dropped dramatically in December, especially when looked at on a daily average basis. For example while Notices of Default dropped 17.5 percent in aggregate, they actually dropped 32.5 percent on a daily average basis due to the fact that December had 22 days on which documents were recorded, versus 18 in November.
“The dramatic drop in foreclosure activity may have been a Christmas gift to homeowners,” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com, “however, given rising mortgage delinquencies it is becoming increasingly clear that foreclosure activity no longer fully represents market realities”.
Unlike November where we saw nearly flat foreclosure filings on a daily average basis, with declines being due to the holiday shortened month, the decline in December foreclosure filings is actually understated due to the increased number of recording days. On a daily average basis, Notice of Default filings dropped a dramatic 32.5 percent from November and Notice of Trustee Sale filings dropped 23.0 percent. We have not seen a similar December drop in recent years, so this is not simply a regular seasonal decline.
This is the critical point. Because of holiday moratoriums, trustee sales should fall. However, Notices of Default keep coming. This shift is not seasonal. One guess is that there are a large number of homeowners who are delinquent, but have not yet had an NOD filed, and have had that part of the process stalled by applying for a loan modification.
We are excited to add an estimate of the current inventory of properties in the Notice of Default, or “Preforeclosure” stage of foreclosure. This estimate takes into account the number of new Notice of Default filings each month, and the average time it takes before moving to the next stage with the filing of a Notice
of Trustee Sale. Despite the downward trend in Notice of Default Filings since March 2009, Preforeclosure inventories have been rising as banks are taking longer to file Notices of Trustee Sale.
There is so much low quality content flying around on this stuff that it’s a pleasure to see a cohesive, well-written, and detail-packed article. Adding to its quality is the fact that the author knows the subject intimately and writes with a hands-on point of view. Loan Modification