Mortgage Defaults Come Roaring Back

Submitted by Rich Toscano on January 13, 2009 - 1:22pm

As discussed in previous installments, a recent change to California state law inserted an extra 30-day waiting period at the beginning of the foreclosure process. Sure enough, mortgage defaults plummeted when the law went into effect. But a couple of months came and went without a commensurate rise -- was something else at work?

Apparently not...

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Submitted by AK on January 13, 2009 - 2:18pm.

Ouch.

Submitted by SD Realtor on January 13, 2009 - 2:59pm.

Rich I have not found the December update on NODs yet but your data is indicating a return to the 3K level! That would be a good thing to help price pressure. Theoretically we should see the NOTs then the trustee sales to fill the fifo over the next few months.

Hopefully that will be the case! As I posted a few months ago I am still very suspicious of things but by my count we should see trustee sales back at the highs we say in summer of 2008 by April/May.

Submitted by cr on January 13, 2009 - 4:17pm.

I guess moratoriums really do only delay the inevitable.

Well, that and leave people even further upside down because their property value fell even further during that time period.

Submitted by NotCranky on January 13, 2009 - 4:48pm.

Looks like "pent up demand" to me.

Submitted by barnaby33 on January 13, 2009 - 5:15pm.

Moratoriums delay and amplify the inevitable. If it weren't going to get worse, it would never be enacted. If and when its removed, all the units that were held back re-enter the pipeline and of course the marketplace has deteriorated even more.
Josh

Submitted by SD Realtor on January 13, 2009 - 6:11pm.

I don't believe the legislation I am referring to was a moratorium. I am referring to the legislation from juy of 08 I believe. It did not place moratoriums on anything but rather just made the default process more of a pain in the ass for lenders. More stringent requirements with regards to notification of the homeowners and such. At least this is what I recall.

No arguments about moratoriums and the likes helping. They only hurt everyone and everything in the long run. I am still curious to see what our president will roll out this year.

Submitted by sdduuuude on January 13, 2009 - 6:37pm.

I only have two words to say about this. The first one is "holy"

Submitted by fredo4 on January 13, 2009 - 7:07pm.

Looks like it's time for plan B.
Can't wait to see the next symbolic gesture they roll out.

Submitted by DWCAP on January 13, 2009 - 9:59pm.

I know this isnt a good topic to talk about in alot of ways. No one likes to hear about people getting creamed financially.

But the economy took a dump in late September. Unemployment really starting going up in Q4, just look at Riches charts, we are not special. Assuming someone lost a job in November or December, they wont show up in the NOD's till Feb or March at the earliest unless they were already behind. The government is certain to try another ploy to "fix things", but the load is just getting heavier and heavier.

Submitted by biggoldbear on January 14, 2009 - 4:44pm.

I only have two words to say
Submitted by sdduuuude on January 13, 2009 - 6:37pm.

I only have two words to say about this. The first one is "holy"

My thoughts exactly.... I think the Spring rally some are waiting for will be a great disappointment

Submitted by 34f3f3f on January 15, 2009 - 9:29am.

Looks like the only good it did was provide a Christmas reprieve. I wonder if that timing was deliberate?

Submitted by Mike_S on January 16, 2009 - 6:59am.

Does someone have the time to compute the 'deadweight loss' created by the moratorium policy???

Regret I don't have time but should be rather significant for this outwardly benign policy.

Mike S.

Submitted by sdrealtor on January 19, 2009 - 3:59pm.

Trustee sales are the key to watch for the shorter term. These NOD's will have no impact on Spring. Todays NOD wont become an REO listing for at least 6 months if not longer.

Submitted by cr on January 19, 2009 - 4:17pm.

The longer they take the slower the correction.

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