Though uncertainty surrounds the state of the industry in regards to foreclosures, the trends in Stanislaus County show show several things:
- Foreclosure levels remain very elevated, near historical records
- Time to foreclose, while still very lengthy, continues to get shorter and shorter
- Banks are reducing foreclosure sale bid amounts to reduce the # of homes they repossess
- REO volumes are declining, but only because more are being sold as short sales or purchased at foreclosure sale by investors. It is still a distressed market driven by foreclosures.
- There is still a lot of money to be made buying and flipping homes. Winning bids are only a few thousand above opening bids, and are averaging nearly 20% below market values.
- The typical foreclosure property in Stanislaus County is 1,000 - 2,000 sq ft, built since 2000, has a mortgage balance between $250,000 - $400,000 but is worth only $100,000 - $200,000.
- Most loans in foreclosure in Stanislaus County were originated (or refinanced) 2005-2007.
Please contact me for a complimentary overview of the local real estate market in Stanislaus County, buying and flipping foreclosure properties for profit, a market analysis of your home, or for proven strategies to avoid foreclosure.
Aaron Lewis, The Lewis Teamaaron@weworkharder.com
P.S. The charts below are automatically updated monthly, so come back often to see changes in the foreclosure market in Stanislaus County.
Foreclosure Filings—Notice of Default (NOD) filings are the first step in the foreclosure process. Notice of Trustee Sale (NOT) filings set the date and time of an auction, and serve as the homeowner's final notice before sale.ANALYSIS:
New foreclosure filings, though showing a very slight decline over the past year, remain at near-record levels. The continued rate of newly-delinquent homeowners suggests we are NOT yet near the end of this foreclosure cycle.
Foreclosure Outcomes—After the filing of a Notice of Trustee Sale, there are only three possible outcomes. First, the sale can be Cancelled for reasons that include a successful loan modification or short sale, a filing error, or a legal requirement to re-file the notice after extended postponements. Often, a Cancellation really means a 30-day postponement of the foreclosure sale. As a result, many of the Cancellations will still end up going to foreclosure sale in the future. Alternatively, if the property is taken to foreclosure sale, the bank will place an opening bid. If a 3rd party, typically an investor, bids more than the bank's opening bid, the property will be Sold to 3rd Party; if not, it will go Back to the Bank and become part of that bank's REO inventory.ANALYSIS
- The rate of foreclosure sale postponements in Stanislaus County is declining. Delinquent homeowners in Stanislaus County should not delay efforts to avoid foreclosure. If the loan modification or short sale process isn't completed by the date of the scheduled foreclosure sale, it is less likely to be delayed or postponed, and more likely to be sold to either a 3rd party or go back to the bank (REO).
Banks are trying to reduce the volume of properties they repossess by discounting foreclosure sale bid amounts. This is to entice 3rd party investors to buy the property in a Trustee Sale in Stanislaus County at a substantial discount below market value. More investors are taking advantage of these enormous profit-making opportunities. As a result, more foreclosures are ending up in the hands of investors, and fewer in the hands of banks.
Foreclosure Inventories—Preforeclosure inventory is an estimate of the number of properties that have had a Notice of Default filed against the property, but have not yet been Scheduled for Sale. The Scheduled for Sale inventory indicates those properties that have had a Notice of Trustee Sale filed, but have not yet been sold or had the sale cancelled. The Bank Owned (REO) inventory indicates the number of properties that have been sold Back to the Bank at the trustee sale, and which the bank has not yet resold to another party.ANALYSIS -
Even though the Foreclosure Inventories for Stanislaus County are showing a decline, it doesn't mean the market is improving much. Consistently high numbers of properties are continue to enter the foreclosure process. More are being sold as short sales in Stanislaus County, and more foreclosures that go to sale are being purchased by investors. So while REO is going down, the market continues to be driven by foreclosures.
Foreclosure Bids—The Published Bid is the amount listed in the Notice of Trustee Sale and is typically the balance due at the original date of sale. The Opening Bid is the bank's starting bid at auction, and is often discounted from the Published Bid. The Winning Bid is the highest bid received at auction and reflects the amount at which the bank or 3rd party purchased the foreclosure.ANALYSIS
- Though anecdotal evidence suggests more investors are buying property via foreclosure sales, or Trustee Sale auctions in Stanislaus County, there is still not enough competition to push bid amounts much. The "Foreclosure Bids" chart shows that winning bids are only about $3,000 to $7,000 above the opening bids, which is not much.
Foreclosure Discounting—This chart compares the winning Bid Amount of properties sold at trustee sale to both the outstanding Loan Amount, and the current Market Value. Banks place an Opening Bid for each property and if a 3rd Party does not make a higher bid, the property will be sold Back to Bank (REO) for the Opening Bid amount. Properties Sold to 3rd Parties will typically have Winning Bids with deeper discounts to both Loan Amount and Market Value as only low Opening Bids will attract investor interest.ANALYSIS
- The chart above shows a measurement for Winning Bid vs. Market Value, showing that investors are able to acquire properties at Trustee Sale in Stanislaus County well below estimated market value.
Time to Foreclose—The average number of days between the filing of the Notice of Default and the final sale at auction for foreclosure sales that occurred during the specified month. Time to Resell—The average number of days between the final sale at auction and when the property was resold by the bank or 3rd party.ANALYSIS
- The time to foreclose in Stanislaus County (# of days between Notice of Default and foreclosure sale at auction) seems to have peaked in spring of 2011, at 313 days. Since then, the time to foreclose has been decreasing. Delinquent homeowners should expect the timeframes to continue to tighten as modified bank foreclosure processes become more efficient.
Filings By Home Size (Sq Ft)—The number of foreclosures that have received either a Notice of Default or Notice of Sale, shown in columns arranged by the size range of the property in square feet.
Foreclosure Filings By Year Built—The number of foreclosures that have received either a Notice of Default or Notice of Sale, shown in columns arranged by when the property was built.
Foreclosure Filings By Estimated Market Value—The number of foreclosures that have received either a Notice of Default or Notice of Sale, shown in columns arranged by the estimated market value of the property in foreclosure.
Foreclosure Filings By Loan Balance—The number of foreclosures that have received either a Notice of Default or Notice of Sale, shown in columns arranged by the balance of the loan in foreclosure.ANALYSIS
- The four charts above can be summed up as follows: The typical foreclosure home in Stanislaus County is between 1,000 - 1,750 square feet, was built since 2000 with an estimated market value of $100,000 - $200,000, and has a delinquent mortgage loan balance of between $200,000 - $400,000.
Foreclosure Filings By Loan Origination Date—The number of foreclosures that have received either a Notice of Default or Notice of Sale, shown in columns arranged by the quarter and year in which the loan was originally made.ANALYSIS
- Reminding us that this foreclosure crisis was caused by subprime loans and a housing bubble, the last chart shows that most foreclosures are for homes whose mortgage was originated (or refinanced) between 2005 - 2007.
California Foreclosure ProcessNotice of Default
- Start of foreclosure process. Initial notice recorded after borrower fails to meet the terms of their loan.Notice of Trustee Sale
- Sets auction date. Can be recorded three months after Notice of Default.Auction
- Initial auction date can be just 20 days after Notice of Trustees Sale is recorded. Auctions can postpone for up to one year, though 30 days at a time is more common. Foreclosure Sale
- If not postponed or cancelled, the property will be sold to either the bank holding the mortgage or to a 3rd party.Trustee's Deed
- Transfers property to winning bidder. By default this will be the lender if no bid higher than the lender's opening bid is received.
This is an overview only. For full details of the process for non-judicial foreclosures in California, please see California Civil Code Section 2924