PLAYING WITH STATISTICS: WHAT IS IN THE FORECLOSURE PIPELINE?

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EDITOR’S COMMENT: The answer is that they are all in the pipeline — past, present or future, because the housing market is in a death spiral and government will not deal with reality. So they put out figures to give a psychological boost to a market that cannot be comforted by statistics when virtually everyone knows one or more people who are in distress over their housing situation. Even the National Association of realtors has admitted to over-stating real estate activity — something they did to try to create the appearance of normalcy.

So the result is that you get wildly disparate estimates of what is in the pipeline, as in the article below, ranging from 1.6 million units to 10+ million homes. My estimate is that ultimately 20 million homes will end up in either foreclosure or some sort of litigation regarding title, enforcement of the mortgage, determining the identity of the creditor in a vicious circle that reaches back further and further into the corrupted title chain courtesy of MERS and the securitization scam in which the loans appear to have been securitized but were not. The money was simply diverted from the payee on the note and they called it securitized.

And there is a nasty rumor going around that the Banks are trying to get a national title registry through congress. I don’t blame them. There is no way for them to correct this mess without losing their shirts if they follow existing law. So they want a new law in which federal law will pre-empt state law. The constitutionality of this attempt is seriously in doubt, but if it passes it will dash the hopes of ever returning to the rule of law in this country and legalize the theft of “free” houses by servicers, law firms and Banks who don’t have one dime in the loan transaction. GET YOURSELF IN ACTION TO OPPOSE THIS EFFORT. IT IS JUST LIKE WHEN THEY TRIED LEGALIZING MERS AND TRIED TO GET THE ELECTRONIC SIGNATURE TO REPLACE THE REAL SIGNATURES OF PEOPLE ON THINGS LIKE AFFIDAVITS WHICH WOULD HAVE PREVENTED DISCOVERY INTO THE IDENTITY OF THE CREDITOR AND WHETHER THE CREDITOR HAD ALREADY BEEN PAID ON WALL STREET AND WAS STILL SEEKING PAYMENT FROM THE BORROWER AND FORECLOSING ON HOMES.

And for those of you who think that the situation will correct itself before it gets to you, think back to 2007 and 2008 when the unthinkable happened. It is still happening and you WILL be affected.

What’s Really in the Foreclosure Pipeline?

Call it what you will—the “shadow inventory,” the “distressed inventory,” the “foreclosure pipeline”—but if you ask five researchers how many houses or mortgages we should worry about, you’ll probably get at least five completely different answers. Given this, Developments examined these worrisome numbers and see how they stack up. Here’s a roundup of distress numbers, and how researchers arrived at them:

LPS Applied Analytics

 Number: 4 million loans

Explanation: This is the number of loans that have either been delinquent for 90 days or more or are in foreclosure. The latest report showed that the number of new loans entering delinquency was slowing, but the number of homes in foreclosure that have not been sold remains fairly flat, mainly because the foreclosure process has been bogged down by legal issues in many states. LPS doesn’t use the term “shadow inventory.”

Amherst Securities

Number: 8.2 million and 10.3 million loans

Explanation: Laurie Goodman, a trusted authority on housing finance issues and managing director at bond-trader Amherst, recently presented this whopping estimate of loans “that may be subject to distressed sales over time.” Amherst divides the nation’s 55 million mortgages into five categories: non-performing loans; loans that were once delinquent but are now performing and likely to re-default; performing loans that are underwater by more than 20%; performing loans that are underwater by less than 20%; and performing loans with some equity in them. Amherst considers loans that are 60 days delinquent to be troubled – most other estimates start the clock on their definition of distress at 90 days.

Barclays Capital

Number: About 3 million loans

Explanation: Barclays Capital’s Chief Housing Economist Michael Gapen produced a report looking at loans delinquent for 90 days or more, foreclosures, and REO, or bank-repossessed properties. His report does not include 30-day or 60-day delinquencies. “If you included those categories…it would be a much larger number,” a spokesman for the bank says.

CoreLogic

Number: 1.6 million homes

Explanation: Sam Khater, an economist with CoreLogic, said that CoreLogic’s shadow estimate is so low because the company uses “roll-rate analysis” to predict how many of the 90-plus-day delinquent loans out there will “roll over” to REO, meaning, how many of the country’s seriously delinquent loans will be repossessed by the bank. Then, the company estimates how many loans, once the house is repossessed by the banks, will end up listed on public multiple-listing services (making them no longer “shadow” inventory), and removes those.

Capital Economics

Number: 4.3 million homes

Explanation: Capital Economics has estimated the number of homes “waiting in the wings [that] will eventually add to the supply of properties for sale” and “prevent a normalization in the visible inventory for several years yet.” Their number is comfortably middle-of-the-road. Their definition does not include REO inventory, and it admits that in the worst-case scenario, there could be a shadow inventory of 15.3 million, using the widest possible definition of the term.

There are a few other helpful numbers out there. RealtyTrac, for example, estimates the total number of foreclosure filings nationwide, and the Mortgage Bankers Association estimates the percentage of loans that are delinquent, divided into 30-, 60- and 90-day delinquencies, but neither service opines on the total number of shadow inventory. The National Association of Realtors has used LPS and MBA data to make estimates on the size of the shadow inventory, but not consistently.

Alan Mallach, a senior fellow at the Brookings Institution who has written about home prices, says there’s no consensus on the definition of the words “shadow inventory.”

“One thing I know we can measure fairly accurately is the number of properties where there has been a foreclosure filing but they’re still in the process, and haven’t yet come out the other end. What’s harder to quantify is how many properties could be foreclosed, but the banks have decided to punt,” he says. “I don’t think 30-day delinquencies are that significant. If you look back long before we had this crisis, 30-day delinquencies, there are always a lot of them.”

In the end, the question of how big a problem the housing market faces from distressed loans, or the shadow inventory, or whatever you care to call it, probably boils down to that real-estate adage: it’s all local. If your community has a high rate default or foreclosure, or even just a lot of vacant property, it’s a good bet that the pricing pain will continue for some time to come.

 

16 Responses

  1. Enraged

    Mortgages escaped MERS. Believe me.

    Of course, you are still calling these so-called loans “mortgages.” Subprime were not mortgages.

    You trust what Pat gives you?? Quote — “In defense to Pat, he gave more numbers ” I hope not.

  2. @E. Toile

    Peace too.

    Anyway, you’re right: patience is the game. I’ve been into patience for 2 frickin’ years (fed. court is slooooooow). Nowadays, I want to learn something of value and… have fun.

    Let’s make other people laugh. Smile would still work. I’m sick of the gloom-and-doom-end-of-the-world thing. And don’t you go out pocking anyone in the eyes: if it’s up to the repugnicans, in a short time, we’ll have no SSI left. Then, Pat with his pocked eyes will be… our problem!!!!!!!!!

  3. E.Tolle makes me laugh…which is actually very “helpful” in stressful times…

  4. @ enraged, my reference to Neil was that he’s the only one that can tell me to lighten up on Pat. Otherwise, Pat’s just another turkey around Thanksgiving. Fair game.

    I have no clue what you’re referring to about me being done. Do you mean legally? If so, I’m far from it. I’m attempting to bitch slap my lender so hard they’ll never sit down again. But these things take time. And patience. I hope to tell you about it some time. It’s been a long haul. I just don’t talk about it. Loose lips sink plaintiffs you know.

    I’m aware of carie’s plight, and truly sorry to hear about it. But these things need to be handled in a linear fashion. If there’s anything I can do, I will. But I’ve never held myself out to be a mentor by any stretch. I’ll still try all the same.

    I did read your whole post. I have no idea what you’re talking about when you say that I said a judge said this or that as it pertains to camping. Must be a parallel universe or something. Speaking of, the whole 1000 years thing doesn’t work for me. But that’s cool. Peace.

  5. @E.Toile

    Sweetie…?
    Honey…?

    Please don’t poke anyone in the eye. Not even Pat. Please?

    And, as much as I hate to break it to you… Neil doesn’t know everything. Don’t wait for Neil to tell you what to think. Please?

    And Carie is going through a tough time. From what you said earlier, you’re done and you don’t fight anymore for yourself. So, you can either go after Pat and waste your energy ranting, raving and being E.Toile or you can support one of us who is currently going through hell and back and show your support.

    Carie needs your support. Have you got information she can use? That thing about Pat won’t help her one bit!

    One thing: Carie reads everything and she doesn’t stop at the first line. You, on the other hand… well, go back, read my ENTIRE post and then, come back and comment.

    Thank you, sweetie. Carie needs all of us. Joann needs all of us. Chris needs all of us. Mary needs all of us. Many more need all of us.
    Pat needs God. Can’t do much about that…

  6. @ enraged, the only reason I club this guy Pat every time he shows up around here is because he’s posted in the past what he really believes is the cause of the problems. Homeowners. His ignorance of the underlying issues is one thing, but to continue to express such blatantly false memes over and over again does nothing but muddy the real problems here, like how to build a proper legal defense against these rat bastards. Pat chooses to maintain his ignorance level and obviously doesn’t bother reading any scholarly work written on WTF happened to get us to where we are.

    The borrower/homeowner had exactly ZERO culpability in this crisis. He chooses to believe the opposite, against all credible studies. This, in my book, makes him the village idiot. His oft repeated claims that the borrowers were able to game the banks when it comes to income and other areas like shop till you drop to find someone willing to loan you money doesn’t hold up to any rational scrutiny concerning generally accepted bank underwriting practices going back for centuries, if not longer.

    Of course he has every bit as much right to post here as anyone else. Just don’t expect me to sit idly in the corner while he re-writes history. Like has been stated before, everyone’s free to their own opinions, not their own facts.

    By all means he’s welcome to demonstrate his ignorance and unfamiliarity with empirical data, his ability to repeat discredited memes, and to repeatedly show his lack of respect for post-crisis knowledge bases such as the Financial Stability Oversight Council or any number of detailed private reports like the great read from the Fordham Law review. But until Neil says otherwise, I’m free to savagely poke the guy in the eye every time he comes around here. It’s a tough job, but someone has to do it.

    Besides, he reminds me too much of that shill Baghdad Bob. Go figure.

  7. yeah, and the military people are getting foreclosed on with no job prospects…2012 is going to be a heck of a year…

  8. @E.Toile,

    And despite everything, the military still like us. Now.

  9. @E.Toile,

    In defense to Pat, he gave more numbers in that e-mail post than we’ve ever had on foreclosures. HOWEVER…

    I’ve come to really, really distrut numbers. They’re used for everything and completely out of context or… they’re used as some kind of “abracadabra” without the research to back them up. Case in point (very lightheartedly…): product ABC cleans “14%” beter than EFG. Really? Please, pray tell how you got to that statistic. Are you sure it’s not just 13.99%? Or 14.02%? I mean, we’re talking real numbers here! Please, can be more specific… in your vagueness? Can you narrow down the margin of error?

    I like to know that:
    1) Not one mortgage escaped MERS. Even the long-ago paid mortgages are in the hands of MERS, being misrecorded and subject to foreclosure… except that we have yet to learn that on bank executive was foreclosed in his mansion. Odd… Coincidence? Grandma’s house is being foreclosed on even though it was paid off 30 years ago… but Dimon can sleep in peace. Ain’t gona happen to him! Bloomberg will see to that.
    2) The same judge you said this morning that OWS could camp on, reversed himself this afternoon and declared that OWS can’t. Oh well.
    3) People are basically honest and hard working. Humanity has lasted that long because of it. There have been a few martyrs to make sure it stayed that way and there will be a few more. Very, very soon.

    It will blow up. They’re setting up the stage for violence, riots, uprisings, civil war, you name it. It will be too big for any government, president, legislature, or any manmade institution.

    My Bible (gotta believe something in this world, right?) tells me that, after that, there will be peace humanity has never seen before. 1000 years of it. I’d like to be here to experience it. Then, I can die happy…

    In the meantime (the “mean” time), we’re all worthy. Pat gives what he has. You give what you have. I… well, I try my best. Ain’t got much to give except the knowledge of what doesn’t work.

  10. a “no longer cuddled clown doll”…you’re killing me…!!

  11. If you have a lot of time to spare -you could add up all the foreclosures registered at the over 3000 counties registry of deeds.

  12. OMG, E.Tolle…you actually brought giggles AND “happy tears” with that one…thank you!!!

  13. @ Pat, like I’ve said before, you should headline Vegas with your comedy act….my side are aching from the guffaw!

    So….you list a bunch of stats from different institutional groups and then the premise of your inquiry is whether or not anyone knows what is going on in foreclosure land? And, you then email that to a blogger and that effort is somehow to be confused with having “original thought” and being published?

    Your constant chanting of “I am worthy” suddenly went from funny to sad, like a no longer cuddled clown doll tossed in a waste basket. Come up with something, anything that proves you have “original thought”, and I’ll be the first to buy a round. Otherwise, just stare into the mirror and keep repeating, “I am someone! I am someone. I know I am!” Maybe, just maybe this nightmare of your never ending desire for adequacy will end and you’ll be paid a visit from the personality fairy. Here’s hoping.

  14. Forgive us, Pat—for we know not what we do…

  15. LOL,

    For those who don’t think much of what I do, on Oct 5, 2011, I wrote a piece that appeared on Mish Shedlock’s Global Economic Analysis. The piece dealt with exactly this subject.

    Now, once again, everyone copies my original thoughts.

    http://globaleconomicanalysis.blogspot.com/2011/10/does-anyone-really-know-what-is-going.html

  16. Would like to know how many have already foreclosed since June 2006. Cannot find this number anywhere. Lowest number of foreclosures ever was in 2005 I think. The “banks” have been foreclosing America long enough. Time to foreclose the “bank”s. Who is the real party of interest – holder in due course – who has standing to do this?

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