Imperial Valley sees 11% drop in foreclosures in May
Imperial Valley sees 11% drop in foreclosures in May
By Frederic A Din
The number of Imperial Valley homes entering the foreclosure process in May was down about 11% from the previous month, according to statistics reviewed Friday, however the number of homes heading to the auction block increased by 33% from the previous month.
A total of 239 notices of default - the first step in the foreclosure process - were filed in Imperial County in May, compared to with a year long peak of 268 in April. However, local housing experts think the drop in foreclosures may be short-lived and it may not do much to remove the public's perception of the Imperial Valley single-family residential market that has been in a slump since the summer of 2006. The foreclosure numbers could turn upward again as an increasing number of adjustable-rate mortgages start to reset this year, according to statistics compiled by residential housing specialist Frederic A Din.
Din, who tracks local foreclosure filings since late 2006 reported that a total of 239 notice of default were filed in Imperial county last month, an 11 percent drop from the 268 in April. The 239 filings were still 136 percent ahead of the 101 notice of defaults filed in May 2007. Moreover, the Valleywide total of 1,207 default notices filed between January and May of this year represents a 144 percent increase over the comparable period one year ago. The decline in the foreclosure notice of default filings is not likely to carry on, Din said.
A total of 193 notice of trustee sales - the last step in the foreclosure process - were filed in Imperial County in May, compared to the previous year long peak at 145 in April. Local housing experts agree that this increase in the number of actual auction foreclosure filings is indicative of a trend showing banks/lenders who are typically overwhelmed by the magnatude of repossessed homes as not negotiating as quickly we would like to see.
When asked, why was there a slow down in default filings last month, Din indicated the possibility is that banks are being swamped with real estate owned (REO) properties. As a result, he said, lenders have not been reluctant to pull the trigger on a foreclosure and while some are negotiating a "short sale", a process in which the lenders takes less than originally lent on the property in order to avoid having to repossess the home. Din notes that while notice of default filings are down in May, the number of homes listed in the Imperial Valley Multiple Listing Service rose, according to reports by local real estate agents interviewed. Hopefully this is a trend in which lenders will go along with a short sale now, thus prevent a full blown foreclosure, Din said.
There are already a ton of properties on the banks and lenders books, so we're hopeful the banks will work out short sale arrangements before pulling the trigger to foreclose. According to Multiple Listing Service data obtained for this report, it appears as if nearly 50% of all sales are short sale and/or foreclosure related such as the sale of a bank owned or REO property.
Foreclosures as set to continue with their overall increase according to Din who indicates that there are more subprime mortgages due to reset this year from 2005 and 2006. Coupled with prime adjustable rate mortgages from 2003, these resets could now affect "A paper" homeloan borrowers who have little or no equity in their homes. Some mortgages use an artifically low interest rate to lure in the borrower. After a period of time, say two years, the adjustable interest rate on the loan adjusts upward. In the past, the homeowner could smply refinance their way out of the adjustment based on the increased value of their home, however in the current market many homeowners are simply upside down and currently owe more than their home is worth, thus they cannot refinance.
While its hard to tell exactly how many homes are upside down, it appears as of as many as 70% of all homes in foreclosure are upside down. Based on discussions with consumers and real estate professionals alike, the Imperial Valley is experiencing "2004 sales prices" in many areas of the County and there are estimates we could still see another 10 to 15 percent drop in prices before stabilzing.
By Frederic A Din
The number of Imperial Valley homes entering the foreclosure process in May was down about 11% from the previous month, according to statistics reviewed Friday, however the number of homes heading to the auction block increased by 33% from the previous month.
A total of 239 notices of default - the first step in the foreclosure process - were filed in Imperial County in May, compared to with a year long peak of 268 in April. However, local housing experts think the drop in foreclosures may be short-lived and it may not do much to remove the public's perception of the Imperial Valley single-family residential market that has been in a slump since the summer of 2006. The foreclosure numbers could turn upward again as an increasing number of adjustable-rate mortgages start to reset this year, according to statistics compiled by residential housing specialist Frederic A Din.
Din, who tracks local foreclosure filings since late 2006 reported that a total of 239 notice of default were filed in Imperial county last month, an 11 percent drop from the 268 in April. The 239 filings were still 136 percent ahead of the 101 notice of defaults filed in May 2007. Moreover, the Valleywide total of 1,207 default notices filed between January and May of this year represents a 144 percent increase over the comparable period one year ago. The decline in the foreclosure notice of default filings is not likely to carry on, Din said.
A total of 193 notice of trustee sales - the last step in the foreclosure process - were filed in Imperial County in May, compared to the previous year long peak at 145 in April. Local housing experts agree that this increase in the number of actual auction foreclosure filings is indicative of a trend showing banks/lenders who are typically overwhelmed by the magnatude of repossessed homes as not negotiating as quickly we would like to see.
When asked, why was there a slow down in default filings last month, Din indicated the possibility is that banks are being swamped with real estate owned (REO) properties. As a result, he said, lenders have not been reluctant to pull the trigger on a foreclosure and while some are negotiating a "short sale", a process in which the lenders takes less than originally lent on the property in order to avoid having to repossess the home. Din notes that while notice of default filings are down in May, the number of homes listed in the Imperial Valley Multiple Listing Service rose, according to reports by local real estate agents interviewed. Hopefully this is a trend in which lenders will go along with a short sale now, thus prevent a full blown foreclosure, Din said.
There are already a ton of properties on the banks and lenders books, so we're hopeful the banks will work out short sale arrangements before pulling the trigger to foreclose. According to Multiple Listing Service data obtained for this report, it appears as if nearly 50% of all sales are short sale and/or foreclosure related such as the sale of a bank owned or REO property.
Foreclosures as set to continue with their overall increase according to Din who indicates that there are more subprime mortgages due to reset this year from 2005 and 2006. Coupled with prime adjustable rate mortgages from 2003, these resets could now affect "A paper" homeloan borrowers who have little or no equity in their homes. Some mortgages use an artifically low interest rate to lure in the borrower. After a period of time, say two years, the adjustable interest rate on the loan adjusts upward. In the past, the homeowner could smply refinance their way out of the adjustment based on the increased value of their home, however in the current market many homeowners are simply upside down and currently owe more than their home is worth, thus they cannot refinance.
While its hard to tell exactly how many homes are upside down, it appears as of as many as 70% of all homes in foreclosure are upside down. Based on discussions with consumers and real estate professionals alike, the Imperial Valley is experiencing "2004 sales prices" in many areas of the County and there are estimates we could still see another 10 to 15 percent drop in prices before stabilzing.
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