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Carrington Mortgage Holdings
foreclosure in decline
Are we coming to the end of the foreclosure problem in the US? That is a deep question with a regionally varied answer, but according to market expert George Yacik in a National Mortgage News column last week, anyone looking to buy a distressed or foreclosed property at a bargain price must move fast and also be prepared to pay much more than a year ago.
"The REO property numbers in the marketplace are definitely shrinking. For banks and the GSEs, REO properties probably peaked in the first part of 2012 and have been steadily declining,” says Chuck Newcomb, chief operating officer of BestAssets, an REO asset management company in Sugar Land, Texas, told Yacik.
“We’re continuing to see lower and lower inventories of REO,” agrees Rick Sharga, executive vice president at Carrington Mortgage Holdings in Santa Ana, Calif. “We’re seeing fewer homes going delinquent, which makes the pipeline smaller. We’re seeing more short sales and loan modifications, which essentially stop REOs from happening. And when the REOs do hit the market, there’s such a demand for them they’re basically moving as fast as they hit the market.”
“The banks are still sitting on a lot of inventory, but not as much as they had been,” he adds.
The latest news from leading REO tracker RealtyTrac showed foreclosure activity at a 6 year low in April, down 23% compared to 2012. Recent statistics from CoreLogic tell a similar story. There were 55,000 completed foreclosures in March 2013, the company says, down 17 percent from 66,000 in the year earlier period. Foreclosures have dropped by more than half since 2010.
San Diego-based analysts DataQuick also agrees that the foreclosure problem has peaked and is on the decline, but also said that caution was needed in the speed at which investors and sellers look to clear inventories in what is still a fragile market.
In its most recent analysis, DataQuick found year-over-year declines in the number of new foreclosures in 29 of the 42 largest counties in the country. But the flip side of that means that there were increases in 13 counties, or more than 30% of the total.
“The supply of distressed properties is falling for certain, but certain dynamics cause us to temper our enthusiasm just a bit,” he says. “Specifically, REO inventory is down, but the months of supply of REO inventory is not falling as fast.”
For example, in Clark County, Nev.; San Diego County, Calif.; and King County, Wash., REO inventory fell 55 percent, 36 percent and 41 percent, respectively, from 2011 to 2012. But the corresponding month’s supply of REO fell only 13 percent, 8 percent, and 18 percent, respectively. “We’re not completely out of the woods,” he says.
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