(10 am. – promoted by ek hornbeck)
When you look out at the bay and notice all the water has been drained its usually a sign there is a large wave coming.
Last week BofA, one of the many TBTF, increased their NOD’s (Notice of Default) filings by 33% m-2-m. After several months since the robo-signing scandal the banks appear now poised to start moving on many of these non-performing assets. Some of which have not had a mortgage payment made in one to over two years.
Just the tip of the iceberg.
[..]There were 4.38 million delinquent loans recorded in July by Lender Processing Services, which does not include the 2.15 million in the foreclosure process.
Over 6 million loans in some stage of foreclosure! Once borrowers reach 90 days delinquent there is very little chance of that mortgage ever becoming current again.
[..]California default notices SPIKED 55% in August, and the number may keep rising in the coming months as mortgage servicers shake off the robo-signing freeze, according to RealtyTrac Senior Vice President Rick Sharga.
In August, servicers filed 28,961 default notices in California, the first stage of the foreclosure process in the state, RealtyTrac showed.
[..]”The industry has not yet returned to normal or necessary foreclosure activity levels, but progress is certainly being made,” a BofA spokesperson said.
Now that is an interesting use of the word “necessary”. Upon further inquiry Rick Sharga attempts to define what necessary may mean to the lay person.
[..]”It wouldn’t be a stretch to say that we might see NODs in the range of 30,000 per month in California for a few months, but it’s difficult to predict that they’d get anywhere near the record levels we saw back in 2009,” Sharga said.
While they may not reach those levels they will continue to stay very elevated as the soon to be foreclosed assets are now of the much higher end inventory. Currently there are 12 Million homes that are underwater.
Much of this new activity is coming from the primary source of BofA books. Expect the remaining TBTF banks not to be left standing on the sideline as all of their books contain toxic non-performing assets and procedures have been put in place which should mitigate any concerns left over from the robo-signing scandal.
These large institutions are already holding back a mountain of shadow inventory to try and keep home prices elevated. In addition to the GSE’s lowering their conforming loan limits, which I wrote about here a couple months ago, there are serious reasons to be worried about the bay being emptied.
Now they are moving forward with the foreclosure process on these delinquent mortgages expect the tidal wave to come crashing in on the real estate market soon.