By William Hudson
CoreLogic’s April 2016 National Foreclosure Report shows that foreclosure inventory declined by 23.4 percent and completed foreclosures declined by 15.8 percent compared with April of 2015. The number of completed foreclosures nationwide decreased year over year from 43,000 in April 2015 to 37,000 in April 2016, representing a decrease of 68.9 percent from the peak of 117,813 in September 2010.
Hallelujah. At this pace, more than 425,000 Americans will be foreclosed upon this year, with untold hundreds of thousands more that will walk away, complete a short sale or modify. Since the financial crisis began in September 2008, there have been approximately 6.2 million completed foreclosures nationally. Homeowner-ship rates peaked in the second quarter of 2004, and since then there have been approximately 8.3 million homes lost to foreclosure.
This can hardly be called a recovery. The current foreclosure scenario shows a slight decrease in foreclosure. However, home ownership is at the lowest rate it has been since 1967. Less than 64% of all Americans now own a home, and it is probable that anyone who has experienced a foreclosure will not enter the housing market any time soon- if at all.
Home prices are also more expensive than they were in 2008 when the bubble popped. This is to be expected when big banks like Bank of America and Wells Fargo are offering 3% down loans with interest rate reduction incentives for buyers with poor credit. It is 2007-Part II in the making.
Miami and San Diego, that tend to be strong indicators of market trends, are showing an uptick in foreclosures and decreasing house prices. Investors are worried that the high-end condo market in Miami is preparing to implode.
CoreLogic also reports that the number of mortgages in serious delinquency (defined as 90 days or more past due including loans in foreclosure or REO) declined by 21.6 percent from April 2015 to April 2016, with 1.1 million mortgages, or 3 percent, in this category.
The April 2016 serious delinquency rate is the lowest in more than eight years, since October 2007. However, there may be more to these numbers than meets the eye. As regulators start scrutinizing foreclosure practices and more class actions are filed, it is possible that these number are being “cooked” to provide a false sense of security for investors who have caused a record surge on Wall Street.
Dr. Frank Nothaft who is the chief economist at CoreLogic is reporting that there is a recovery in home prices and an improved labor market that have contributed to the drop in delinquency rates. Nothaft better conduct more due diligence. Home prices have not “recovered”, they have inflated due to cheap money flooding the housing market. The labor market is weak-enough that the Federal Reserve held off raising interest rates this week. “[T]he pace of improvement in the labor market has slowed while growth in economic activity appears to have picked up. Although the unemployment rate has declined, job gains have diminished,” the central bank wrote in its statement. Drink the red kool-aid…. it’s all good.
CoreLogic reports that the number of homeowners who have negative equity has fallen by two-thirds since its 2010 peak. That’s what happens when the central banks create yet another housing bubble, and mimics the exact financial properties of 2006-2007.
Additional April 2016 highlights:
• On a month-over-month basis, completed foreclosures increased by 0.3 percent to 37,000 in April 2016 from the 36,000 reported for March 2016. To compare, prior to the decline in 2007, completed foreclosures averaged 21,000 per month between 2000 and 2006.
• On a month-over-month basis, the foreclosure inventory was down 3 percent compared with March 2016.
• The five states with the highest number of completed foreclosures were Florida (66,000), Michigan (47,000), Texas (27,000), Ohio (23,000) and California (23,000). These five states accounted for about 40 percent of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures: The District of Columbia (128), North Dakota (317), West Virginia (482), Alaska (653) and Montana (695).
• Four states and the District of Columbia had the highest foreclosure inventory rate: New Jersey (3.7 percent), New York (3.2 percent), Hawaii (2.2 percent), the District of Columbia (2.1 percent) and Florida (2 percent).
• The five states with the lowest foreclosure inventory rate were Alaska (0.3 percent), Minnesota (0.3 percent), Utah (0.4 percent), Arizona (0.4 percent) and Colorado (0.4 percent).
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