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Useless data.  I live for it.  What can I say?  When running the normal foreclosure numbers for you all, I decided since I have all these numbers just sitting there, I needed to do something with it.  So here you go, Melina’s fun facts about foreclosures in Salem Oregon.  Okay, I know what you are saying.  If I think this is fun, I really  need to consider poking a sharp stick in my eye for a rip roaring time, but I’ll pass on that.  Thanks for the offer though. ;-D

• The average mortgage on a home served with a foreclosure notice in Salem Oregon in 2011 was $182,593.
• The dollar amount of mortgages that went into foreclosure in 2011, just here in Salem, was a staggering $160,316,665.  Yes…$160 million for those of you that have comma woes.
• The top 5 neighborhoods served with notices of default were Jan Ree with 31, Englewood with 14, Highland with 13, Wilark Park West with 13, and Creekside Estates with 10.

Phew…now I feel better having unloaded that information from my brain.  The good news is that you can’t get that useless information anywhere else so remember it because there will be a quiz later.

Now, you may look at this lovely graph and see the downward trend that every newspaper is writing about. It’s true foreclosures are technically down 39.7% from 2010 in Salem.  I should be doing the hokey pokey over this but let’s face it, I’d look really idiotic doing that dance since I’m older than 7.5.  I’m more of a chicken dance kind of gal anyway, especially if I have a Gligamesh or Seven Brides brew in my hand…

But I digress, as usual.

We ended the year with 922 foreclosure notices filed on Salem homes.  Some of you may remember my insanely gorgeous charts from earlier in the year where I extrapolated the data for those pesky MERS properties.  Still have those homes just  hanging out there with nowhere to go. Now, Wells Fargo has most definitely forged ahead with judicial foreclosures and Chase appears to be going that route for MERS here locally.   All banks are still foreclosing on non-MERS properties after taking a brief reprieve in the third quarter.  As such, our foreclosure notices were down significantly this year.    It is likely that foreclosures would have declined this year anyway, but not by this much.  This is an artificial drop.  I disagree with the hype in the press that the market is improving. It’s just more of the same…vexation.

I can hear my Scottsdale real estate nemesis right now.  Step away from the thesaurus, Tomson.

A special thanks to Fidelity National Title for supplying me with loads of data for me to crunch and nurturing my inner data geek.  I feel better already. Okay, the Torii Mor wine was probably a bigger factor in feeling better, but I’m NOT doing the Macarena.  Not happening people.

Oregon has long been a state that uses Trust Deeds for real estate transactions.  With the ease and low cost of foreclosure for banks, it was the instrument of choice for many years here in Oregon…well as long as you follow the state laws.  You’ve heard the terms, judicial foreclosure, non-judicial foreclosure, deficiency state, non-deficiency state.  Like all things to do with law, nothing is black and white.  There are some huge changes with serious implications headed the way of homeowners facing foreclosure.

I chatted about the MERS problem Oregon was having and the backlog of foreclosures this was going to cause.  Not a good thing for anyone, in my opinion.   In the Oregonian a couple of weeks ago, Brent Hunsberger wrote an article about the shift that banks were making, taking foreclosures to the courtroom.  Left with little choice , due to legal issues, the lenders that can actually produce the original note are headed to chat with a judge about getting the property in a judicial foreclosure.  I was curious to see if we would have any of these converted foreclosures head our way in Salem.  Sure enough, I looked through the notices this week and there it was…a nice list of attorney names, including the firm mentioned in the Oregonian article, Kelly Sutherland.  Salem homeowners that have been in limbo due to the MERS debacle are going to find their way into a courtroom and standing in front of a judge.

What this means is that the building shadow inventory will once again start working its way down the foreclosure pipeline as banks start to push their way through the system.   There are so many implications with judicial foreclosures. A HUGE one for homeowners facing foreclosure is ORS 86.705(3).  This statute can convert a residential trust deed to a non-residential one which allows for a deficiency judgment.    This could be financially disastrous for many people out there who are facing foreclosure and end up in a judicial proceeding.  I am personally appalled that banks could break Oregon laws by failing to record note transfers properly, then have an “out” for a judicial proceeding which may open up some families to deficiency judgments that they would have been protected from before.   That just isn’t right.

If all banks decide to follow Wells Fargo’s plan for MERS held loans and go the judicial route,  homeowners facing foreclosure MUST talk to an attorney before they move out of their home.   It is imperative because the game just changed.

Back in the boom, MERS was a cornerstone of the real estate market offering a way to offload mortgages to investors allowing banks to continue to originate loans and make bundles o’ money.  Apparently, my strategy of waiting at the end of the rainbow for my pot of gold wasn’t a good one: should have been a lender.  Lots of green, just not in the form of little people with funny hats.  Now, lenders wouldn’t have been able to meet the demand of the American consumer for housing loans without sending loans off into the netherworld to be split up and chopped up into bite sized fare for investors.  This MERS legacy is the gift that is contributing to the ongoing hell that is real estate these days.

Getting real on Salem Oregon Foreclosures

I almost didn’t write my quarterly foreclosure post because the data, or lack thereof, isn’t an accurate reflection of things to come.  So, I pulled a NAR this quarter and extrapolated my data a bit for you.   I wrote last quarter about the impact of MERS in Oregon, and in particular Salem.  I doubt most of you care what is happening in real estate in Topanga so we’ll just chat about Salem.  What you need to know but don’t really care about is that in the second quarter of this year, not one MERS held foreclosure notice was filed in Salem.  This is significant because last year 48% of foreclosure notices were MERS held.

Why aren’t they filing?  Well that has to do with the 5 lawsuits that have occurred in Oregon this year, with the latest one the judge rescinded the foreclosure as the note transfer wasn’t properly recorded per Oregon laws.  As these loans were fractured and sold, Oregon law requires the transfer be recorded at the county level.  Due to the massive costs associated with doing this, the banks decided “eh…what the heck with Oregon laws.  Those people are up hugging trees anyway.  They won’t notice.”  This cavalier attitude works as long as the seller doesn’t default.   It isn’t so pretty when foreclosures happen oh say such as circa real estate 2007 and beyond.

I might need a cocktail

What does it matter?  Well, if you are a home seller right now, what you are seeing is a reduction in inventory.  Huge price drops on homes happened in the first quarters this year so buyers are out.  The reduction in inventory is a sign of stabilization, for now.  This is the gift of MERS present.  Incompetence on the part of the big 8 in following those pesky state laws has caused a temporary stop in those properties hitting the foreclosure market.  So potentially 48% of homes that should be hitting the foreclosure market aren’t.  That is causing a nice drop in inventory.

But you know that old adage, all good things must end up in annihilation.  Or something like that.   Anyway, what is building is of concern for our local market.  See my pretty picture?  I worked really hard on it so say it is pretty or my feelings might be crushed and I’ll have to go drown my sorrows in one of @RobDrinkenstien’s amazing cocktails at La Capitale.

Notice of Defaults in Salem

We had a dip at the end of last year and it looks like there is a dip this year, but this is where I pulled a NAR.  MERS notices aren’t getting filed, while those cases work their way through the Oregon legal system.  What this means is that we really should have 48% more foreclosures each quarter than we really do (assuming that the percentage stayed the same as last year).  So I created a special bar for the ghost of MERS.  These are the potential notices that should be out there but aren’t.    Why is this a concern?  Because they are building up, and at some point in the future when the MERS situation gets resolved there will be a tsunami that hits Salem as the notices hit the county.  Right now we have a regular flow of foreclosures hitting the market so we can, in theory, have some sort of stabilization.  If this buildup continues and those homes get dumped on the market in a short period of time…do I need to tell you that would be bad?

What we are looking at is the ghost of MERS future, and it sure doesn’t look like Casper.