Foreclosures! The Next Big Wave, When?

I have been doing my best to track the foreclosures in Santa Barbara County now for a few years and so far I'm not seeing this next big wave everyone seems to be mentioning.

Businessweek published an article that said they could hit this summer.

L A Times also had a recent article about the impending wave.

Maybe I need to be more patient and let this play out. There is another interesting article by the New York Times with a little different slant on things.

They mention that banks are not wanting to foreclose on properties these days for one big reason. Many lenders have a troubled balance sheet and to take possession of more foreclosed properties only makes the books worse.

The article makes it sound as though more lenders are willing to try and work something out with the troubled borrower than they would be before all these foreclosures happened.

So what does that mean to us in Santa Barbara County? Last year around this time we had just seen the highest number of Notices of Defaults, Notices of Trustees Sales, and Trustees Deeds recorded in the history of Santa Barbara County.

This year we have seen the number of Notices of Default hit an all time high in March. A curious thing has been happening though. The number of Notices of Trustees Sale, and Trustees Deeds are down significantly from last year. Could the New York Times article be right?

One other explanation is that the lenders are just not processing these properties as fast as they should in an effort to keep the books looking as healthy as possible.

Do I still need to be more patient or is it possible that some of the lenders are working harder to keep people in their properties? Time will tell.

I would love to hear what you are experiencing.

The Lenders Continue Their Foreclosures

October in Santa Barbara County saw lenders take back 109 properties countywide. That number is significantly lower than August or September where there were 211 and 208 respectively. That has to be good news for someone.

There were 17 properties total for the communities of Santa Barbara, Goleta, Carpinteria, and Montecito. That is about a 20% decrease from the prior 2 months.

Lompoc saw only 20 or so properties in there area and Santa Maria continues to be the foreclosure captital in Santa Barbara County with 70ish properties going back to the bank in October.

The majority of the loan amounts appear to be below $500,000 with many in the $200,000 to $300,000 range. In the south county the number was split between homes and condominiums. In the northern part of the county there were very few condominiums.

Countrywide continued to have the most properties on the list, but they didn't overwhelm the list like they have in the previous months. Make sure to check out the map below to see more details for the properties and areas you are interested in.

Santa Barbara County Foreclosure Trends

I don't know about anybody else, but I'm getting pretty dizzy watching the stock market go up 400 points one minute and then be down 200 points the next. It has been a very wild ride to say the least if you are paying attention there.

The Santa Barbara County real estate market hasn't been so up and down. It has been pretty consistent for the most part.

With respects to foreclosures and some of the indicators I watch to tell me whether they are slowing or not, the trend is certainly slowing.

The most significant number in September was the number of notice of defaults the county reported recording. There were only 112 as compared to 269 in August. I am certain that some of the legislation requiring lenders to get in touch with borrowers before recording these notices is having an affect on how many are being recorded, but I also think they will be working out the terms of some borrowers loans which again will cause the default rate to slow down.

The number of trustees deeds has also declined in a large way from 217 in August to 146 in September. More obviously good news for the foreclosure market.

The last 2 pieces of the equation are also spelling relief for the foreclosure market. The number of loans that are adjusting this month is 228 which is the peak for the year. I have data out to January 2009 and that number is 115. This tells me less borrowers are going to feel stuck in the adjustable loans they have.

The final part of the foreclosure equation in my mind is how many of these foreclosures are selling? This is important since that inventory needs to be bought up before we are going to see prices start to really stabilize and climb. In Santa Barbara County there were 81 of those properties purchased in September. This number has continually increased since January of this year showing me that the price point is being reached.

Foreclosures aren't going away any time soon, but they are selling and they are becoming less of an impact on our residential markets.

Are You Searching For Foreclosures Or Short Sales In Santa Barbara?

I had the pleasure today of speaking to Sue Irwin. She is an agent working for Prudential California Realty in Santa Barbara. She introduced me to a new website that she and her partner Kalia Rork have just launched.

http://www.sbforeclosureinfo.com/

She promoted it as a place where someone can go and either get educated on short sales and foreclosures or search those types of properties that are listed in the Santa Barbara area.

I know that I have certainly been asked more then once on how to find distressed properties in Santa Barbara. This seems to be a quick way to search the Multiple Listing Service for any properties that are listed for sale meeting those requirements. 

Good Luck to Sue and Kalia for launching what I think is a unique service. At least it is for now! 

Santa Barbara's "Notice of Defaults" Are On The Decline!

In light of the news last night about the government getting more involved with the bad loans that are out there, the decline in notices of defaults being recorded in Santa Barbara County is more good news in an economy that hasn't had much in recent months.

If the notice of default number continues to decline there just isn't any way the number of foreclosures will continue it's unprecedented rise. One other item of note is the number of loans that are scheduled to adjust in Santa Barbara County in the coming months is also declining sharply.

Foreclosures have been a significant part of the real escape landscape in the last couple of years. They have had as much to do with volume going down as well as the median price. I do expect them to continue to taper off through the end of the year and in to next year even if the government doesn't step in and do anything to exaggerate that decline.

What will this mean for local real estate. I think we are already seeing it in the Santa Maria and Lompoc areas. The median price there has begun to stabilize and the number of transactions has been up significantly from last year.

Since those areas have seen the most number of foreclosures it will take them more than just a few months of sales to stop feeling their affects. I do believe that you could possibly see some real price stabilization early next year, with a threat of prices rising sometime near the end of 2009.

As far as the Santa Barbara area is concerned it may take a little longer to see any real price appreciation. The north county may be a barometer of things to come on the south coast and will probably see prices rising sooner than the Santa Barbara, Goleta, and Carpinteria areas will. With the new government program that is being finalized this weekend though all bets are off on exactly how quickly things will get back on track.

Santa Barbara County May REO's

Foreclosures are certainly a reality in today's real estate market. Santa Barbara County has experienced the affects of properties being taken back by lenders now for quite some time.

In May there were 162 properties that were taken back. The South County had 17 properties that found their way back to the bank in May. 14 of them were residences with 4 being condominiums and 2 being multi family properties. The final property was an Industrial property on Carpinteria Ave. that had a loan amount of over 7 million dollars. The Santa Barbara Housing Bubble Blog gives some of the hole by hole goings on with that property.

The 17 properties spanning Goleta, Santa Barbara, Carpinteria, & Summerland is more than double the number from April. This is really unusual for the South Coast. Having this many properties being bank owned is historically significant. I would expect there to continue to be a number of foreclosures. I don't expect the number to rise much if any. Buyers appear to be picking up on these properties being priced right.

This leaves 146 properties in Northern Santa Barbara County. Once again Santa Maria is the hardest hit. 101 was the grand total for that area. All of these properties were residential. 1 was a multi family property, 13 were condominiums, and 87 single family residences. The list of lenders looks like a who's who's from the latest front pages of the business sections of any major newspaper.

Lompoc needs to be referenced in this article as they have had many of the same issues as Santa Maria. There were 34 properties in Lompoc. They were all residential with 7 being condos, 1 being a multi family, and the rest being single family.

Lastly, the Santa Ynez Valley had a few foreclosures, not really enough to mention. They all appeared to be single family residences.

Of course this information is deemed reliable but not guaranteed. For more details on individual properties as well as a visual on where these properties are located you can click on and use the map below.

Santa Barbara County Foreclosure Trends

In reviewing the statistics on the foreclosure chart. You can see that having some historical data is a good thing.

The number of Notice of Defaults that have recorded the last few months are hanging around the 250 to 280 ish mark. I think this is probably where Santa Barbara County is going to be for a while.

I say this because I can see that the numbers of loans adjusting is going to continue to rise through August which is the latest month I have.

August's number is 222, which is the exact same number of loans that were scheduled to adjust in the county in November. November was the highest month on the chart to date. It will be interesting to see if that number goes any higher this year. I suspect it could.

The number of Trustees Deeds peaked in January and so did the number of Notice of Defaults. It is good to see a correlation between those 2 numbers.

The number of REO sales hit an all time high in March of 25, one more than we saw in February. I would expect these numbers to be consistently at this level or higher for the coming month. This is a particularly good sign, because that means the lenders are getting these properties off of their books.

From what I'm hearing it sounds like the lenders who are taking these properties back are doing what they can to move these properties quickly, and our markets seemed to have adjusted to it.

You may notice on the chart that the number of REO's and Trustees Deeds are converging. This is also good, because the number of properties being sold to end consumers and the number of properties that banks are taking back are coming closer together.

In other words the number of bank owned properties on the market will be less of an influence since they are moving about as soon as they come on. The faster this inventory turns over the better and closer we are to having a market less influenced by these foreclosed properties.

See You In Escrow

Are There Any Deals Today?

Being asked the question about getting a good deal on a piece of property these days always seems to turn the conversation to foreclosures and bank owned properties.

These bank owned properties are better known as REO's or Real Estate Owned. I decided to do a little homework on the REO's in Santa Barbara County. The properties I decided to check out were the ones where a deed had been recorded making the foreclosing lender the new owner of the property.

I found that there were 203 properties in January and February that the banks had taken back. Of these 203 properties here is how they broke down by city

Buellton 1
Carpinteria 4
Goleta 8
Guadalupe 5
Lompoc 36
Los Alamos 2
Orcutt 1
Santa Barbara 13
Santa Maria 130
Santa Ynez 2
Solvang 1

It doesn't take a degree in mathematics to look at these numbers and see that Lompoc and Santa Maria are where most of the foreclosure activity is. Nearly 82% of the properties are in those 2 areas.

The South Coast has a little over 12% of the properties that went back to the foreclosing lender in January and February. The remaining 6% are spread out amongst the Santa Ynez Valley and the smaller cities in the North County.

The types of properties that are now owned by the bank break down like this
Condominiums (Residential) 21
Multi Family Units 8
Residential Agriculture 2
Single Family Residence 170
Vacant Land 2

Single Family Residences continue to be the types of properties that are being foreclosed on. Maybe next month I will take a look to see how many are second homes or primary residences. Either way these properties are putting a drain on the residential market.

Some specifics about the loan amounts that were foreclosed upon are these
Average Loan Amount $409,129
Highest Loan Amount $1,348,319
Lowest Loan Amount $15,000

These loans that were foreclosed on have some interesting characteristics. The oldest loan was taken out on December 3rd 1997 for $88,738 on a single family residence on Lockwood Dr. in Santa Maria. The most recent loan was taken out on April 27, 2007 for $181,000 on a single family residence on Concha Loma Dr. in Carpinteria.

I find this information all pretty fascinating, but does it help answer the question about there being any real deals out there when you are looking for property. I don't think it does. I don't think it will, but at least you are now armed with hopefully more than you knew before about the properties that have been taken back by the lender.

If you would like more information on these properties click here and you will be taken to a map of the county showing these 203 properties. Good Luck in your search.

Michael Jackson's Woes Continue!

I have been reading in the news lately about Michael Jackson and the Notice of Trustee Sale that was recorded against his property.



Since I'm in the business where this kind of public information is easy for me to get I decided to get a copy of the document if for nothing else to at least satisfy my curiosity.


After reading through it I thought it might be worth posting this short article on the drama playing out in Los Olivos.



The document was recorded on Monday Feb 25th at 8:12 in the morning. It references a Deed of Trust that was recorded April 14th 2006.


The amount of money referenced in the Trustees Sale Document is $24,525,906.61. This amount is not the full amount as there are additional monies that will be added on to that. At this time, I'm not able to figure out what those monies might entail.



The sale is scheduled to be on March 19th 2008, at 1pm at the County Courthouse 1100 Anacapa St. in Santa Barbara Ca.



The Trustees Deed doesn't mention the lender by name, but I did pull a copy of the trust deed and it is DBCG LLC whose address is in c/o Fortress Credit Corp. in New York.



The interesting part of the document is later on where it references all the personal property and begins to itemize many of the fixtures that The Neverland Ranch is famous for.


Some of the items listed are trains, carousels, and merry go rounds. They don't stop there, audio visual equipment (If I remember right there is a pretty good sized theatre on the property), computers, etc...



If I'm reading this document correctly they are even making sure that the use of the word "Neverland" is included in sale to some degree.



I can't help but think of the circus that has surrounded this property and it's owner ever since he bought this property. I have absolutely no idea if Mr. Jackson will be able to satisfy his lender or if the property will end up being auctioned on the courthouse steps or even end up in the lenders hands. The fate is truly up in the air from what I've heard. One way or another I'm expecting more of the circus of news and media coverage we have all been used to seeing.



I have attached a copy of the document so anyone who would like to can read it for themselves. See You In Escrow!

2007 REO's, Where Are They?

One of the topics of conversation in recent months has been on foreclosures. Where are they, how many, etc.... With the help of LandAmerica foreclosure services I have been able to get a list of all the properties that ended up being foreclosed on by the respective lender and ultimately owned by that lender.

If you didn't know what REO stood for, it is Real Estate Owned and I believe it is a term coined by lenders to represent the properties they own via foreclosure.

The map below represents all of those properties for the year 2007. You can zoom in to a particular part of the county and see which properties are represented. If you would rather browse the list of addresses, they are to the right of the map you can then click the one you want more information on and it will appear. I hope this is useful.

There are over 400 properties displayed on this map, so it can take a few seconds to load.

Santa Barbara Foreclosure Info December 2007

The first thing that is evident from the chart is the number of Notice of Defaults recorded in December spiked up from November.


There were less than 150 recorded in November and December's number rose to over 250.
That isn't good news for homeowners.

• The number of Trustees deeds rose as well to over 50. This number reflects a lender taking back properties that had been in foreclosure.
• The number of loans adusting dipped a little and the number of REO (bank owned) properties that sold continued a pretty consistent trend.
• Santa Barbara County has been a tale of 2 market places, with the Santa Maria and Lompoc areas experiencing 90 percent of the foreclosures this year.
• The Santa Barbara area, which includes Carpinteria, Montecito, and Goleta have had relatively low numbers of foreclosures.

What will we see in the future?
There has been a lot of attention paid to this market. The government has stepped in and given many sub prime borrowers time to sort our their situation. There is also continued talk about raising the conforming loan limits in California, which could help some home owners. The continued pressure to lower interest rates even more is also something that could affect this market in the near term. I will not be surprised even with the number of Notice of Defaults being recorded if we don't see a pretty significant slowing of homeowners in distress.


If you would like more of a California perspective check out this article on Inman News. Let me hear you thoughts and See You In Escrow!

Santa Barbara Foreclosure Info Nov. 2007

I wasn't sure if there would be anything interesting to post about until I gathered the numbers. I am only hazarding a guess when I say that if you look at the last few months it would appear that the foreclosures in the county are slowing down a bit. The number of Notice of Defaults that were recorded in November fell to 121 as compared to 176 and 209 in the previous 2 months. I would think that would be the leading indicator of what the foreclosure activity is. The bank owned properties that sold were 17 which is a bit more than in previous months which might indicate there will be less of these properties on the market soon. The properties the banks took back was 40 which was down slightly from last months 45. The number of loans that adjusted in November was 220 which is the highest number I currently show through June of 2008. You can draw your own conclusions, but from what I can tell the foreclosures look to be slowing down, and hopefully that isn't because of the holidays season. See You In Escrow!

Santa Barbara Foreclosure Info

I started keeping track of the Notice of Default recordings as well as the Trustees Deeds and REO deeds. I have added a new item to the chart this month showing the number of mortgages in the County that are going to reset in that month. The number of Trustees Deeds jumped up a bit which you would probably expect because of the increase in the Notice of Defaults that were recorded the previous months. The REO's stayed about the same and the number of loans that are adjusting is obviously not showing us anything until we get a few months on the chart. I think the fact that the Notice of Defaults has gone down the last couple of months is good news and should reflect in fewer Trustees Deeds and REO's on the market. The one thing I am a bit naive about is whether or not the NOD's are going down because of a seasonal influence or not. Stay tuned, and See You In Escrow!

Appraisal Process Under Fire!

Last week New York's attorney general filed a lawsuit against a larger appraisal management firm for allegedly giving in to pressure from a major lender to manipulate their appraisals for the benefit of the lender. The attorney general wasn't able to file suit against the lender because they fall under federal law. It will be interesting to see if the lender will finds itself in hot water. This brings up an issue that a survey released earlier this year highlighted. The survey done by October Research Corporation and Forsythe Appraisals, LLC had responses from 1200 appraisers nationwide. 90% of the respondents indicated they felt "uncomfortable pressure" to adjust appraisal values. In 2003 the survey indicated that 55% of the respondents felt that way. That is a very substantial increase and has certainly added insult to injury with respects to the foreclosure and distressed sale market. This lawsuit in New York will be interesting to watch and see if other lenders or appraisal firms are hit with similar suits. In Santa Barbara I would like to think that we have been honest in our dealings here in Santa Barbara, but I would like to hear from anyone that might have some insight in to this. See You In Escrow!

Santa Barbara Counties Foreclosure Information

I took a few minutes today to see what the picture looks like for properties in various stages of the foreclosure process in Santa Barbara County. I used an online Dataquick account I have. I first wanted to look at the number of Notice of Defaults that have been filed. This is the first step in the foreclosure process where a trustee on behalf of a lender records a Notice of Default on a property. Borrowers sometimes pay the lender what is owed and then these Notices are rescinded. So a property can be in default more than once. I noticed that there have been a steady increase in the numbers over the last year. The numbers really jumped in July, which would coincide with the Credit problems everyone has heard about. The most recent months show the number of defaults around the 200 number for the county. I then looked at the number of Trustees Deeds that have been recorded. This document is recorded at the end of the foreclosure process and is when the bank takes back the property or an investor buys it. This number seems to have sputtered along until about June where it hit 36 and was followed by 40 in July. The next couple months show a small drop off. The final piece of the foreclosure puzzle is how many properties are banks selling after they have taken them back. That is represented by the number of REO deeds that are being recorded. Those numbers coincided with the number of Trustees Deeds. There were a few more of them from June to September. I am going to start comparing these numbers with the number of loans that are adjusting every month. That will begin in October and we'll see what direction that points this market in. I can tell you I have those numbers starting in October 2007 and ending in July 2008 and October and November are the biggest months during that time frame with loans adjusting. Hopefully that means we have peaked when it comes to these troubled properties. Let me hear your comments. See You In Escrow!