• 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.

]]> http://salemoregonrealestatehomes.com/2012/01/28/the-home-truth-about-salem-foreclosures/feed/ 0 http://salemoregonrealestatehomes.com/2011/09/16/the-game-just-changed/ http://salemoregonrealestatehomes.com/2011/09/16/the-game-just-changed/#comments Sat, 17 Sep 2011 03:08:41 +0000 melina@tomsonburnham.com http://salemoregonrealestatehomes.com/?p=4566 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.

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.

You’ve all heard of MERS, the Mortgage Electronic Registration System.  This is the system that banks used to funnel and split up mortgage notes to investors without recording the change with the counties.  Why should you care?  Well, beside the serious legal ramifications, you should care if you plan to buy or sell in the next 5 years because of distressed inventory.

Last year, 2010, 48% of the notice of defaults served in Salem proper were by MERS.  48%. So far this year, only 6%.   On March 5th of this year, it was reported that MERS foreclosure filings were stopped while the legalities were worked out.  What this means is that we would automatically see a drop in notice of defaults as MERS holdings aren’t going to be filed.  It looks like distressed inventory is going down, but in reality it was just pushed forward into the future a bit.  In the first quarter of this year, 297 NOD’s were filed for Salem homes.  If they were on pace for the same percentage as last year, that number should be around 421 with the missing MERS filings.  While this would still be down from the peaks of 2009, we don’t have a really good gauge on what that inventory is doing and how long it will take to hit the market.  

With the legal issues surrounding MERS ability to serve foreclosure notices, that leaves transferring the title with the seller at the helm.  It seems to me that the only “easy” way for MERS to handle their legal debacle is to get the sellers to sell or legally transfer them the property with a deed-in-lieu of foreclosure.  I have noticed that banks are really interested in the deed-in-lieu’s these days, as I would expect that it corrects for the legal issues that they created with MERS. I can also say that the banks responsiveness on short sales has improved significantly.

The take away from my ramblings here?  Bargain hunters don’t worry.  The market isn’t going anywhere fast and this may have pushed out those offerings that might have hit the market this year, into next year.  This is good news for people that sold short due to a job loss or some other hardship.  When you are eligible to buy again in a couple of years, there should still be some bargains out there in the distressed property market.   Sellers?  Still don’t have good news for you.

If you are thinking of buying a foreclosed home in Salem, watch the slide show below for a sample of the current inventory. You can sign up to get all the foreclosures emailed to your inbox as they hit the market.

My advice?  Don’t read the national media stuff regarding foreclosures.  What matters is what is happening here locally in Salem Oregon.  So, what’s happening?

Salem Oregon Foreclosures

In 2010, the amount of notice of defaults filed with the county clerk’s office dropped by 8.7% over 2009.  While, they are still running about 4 times normal, ANY kind of decline is a good thing in this particular market sector.

The 4th quarter foreclosures dropped to 313 which is down from 4th quarter 09 by 38.5%.  There was a two week moratorium on filings by Fannie and Freddie for the holidays, but that wouldn’t have a huge impact on these numbers.

So, despite what you might have read regarding foreclosures, at least in Salem Oregon our numbers in 2010 were better than 2009.    It will still take several years ahead of us to work through all of this inventory, but at least we can say we are heading in the right direction.

I’ve been distracted with other things lately which will make blog fodder, I’m sure, at some point in the future, but I did want to chat about the present just briefly.  It seems like with our recent elections the angst of Oregonians is really apparent due to the closeness of the governor’s race.    Unemployment is high, those who are employed may be underemployed or had pay cuts, and housing, of course, is still in turmoil.

Enter foreclosures…

Foreclosure notices in Salem Oregon

I had been really excited about the drop in the number of homes served with foreclosure notices in Salem Oregon.  We had two quarters of pretty substantial drops in notices served and this past quarter had a bump up of 6.5%.  Keep in mind that this bump is still down 22.8% from the worst quarter so that is still a good thing.

The closing of one of the prison’s doesn’t help the local job situation, but the Home Depot distribution center is getting ready to hire. I think we are going to be in a job gained, job lost situation for a while, which means our unemployment numbers are probably going to hang up high for a while.  Obviously the higher the unemployment numbers the worse our foreclosures will look.

I don’t think we will spike back up to those 500 notices of default kind of quarters, but we still have a few years ahead of us in working all of these homes through the system.  As of the minute I typed this post, (that’s how totally up to date I am), 14.2% of homes sold to date in Salem Oregon were foreclosures or short sales.  For all the home buyers out there that think that every seller is in foreclosure, only 14.2% of active listings are short sales or foreclosures.  So 85% of home sellers…not in foreclosure.

So other than these juicy little tidbits of data, I’ve got nothing new for you.

Same ol’ same ol’.

Bargain hunters…See the Salem Oregon foreclosed homes and then you know the drill…call me.

Foreclosure data is calculated from information received from Fidelity National Title Co.  Sales data is calculated from the WVMLS.

Interpreting the foreclosure data

First of all CoreLogic and I look at different things.  First,  they have their foreclosure rate calculation. This is a calculation based on the number of mortgages involved in the foreclosure process at any given point in time. Think about their data this way.  In January,  10 loans get served with a notice of default.  5 works things out with the bank, 5 don’t.  Those 5 homes are slated for auction in April.  April comes and 2 of the 5 delay their auction to do a short sale.  The other 3 go to auction and 10 more people get served with a notice of default.  So CoreLogic says that there are 12 homes (the 2 short sales plus the 10 new properties)  in their foreclosure rate in April which is a 20% increase over January.  It isn’t that 20% more homes got served with defaults, it is just that there are 20% more homes in the system.   CoreLogic’s “foreclosure rate” isn’t a foreclosure rate the way more lay people think about it.  There wasn’t an increase in the number of homes that went into foreclosure in Salem Oregon.  There was an increase of the number of homes in the system.  Essentially, CoreLogic’s foreclosure rate is really a shadow inventory rate.

The other difference in our data is that my data is Salem Oregon proper.  I don’t include Keizer, Gervais, Turner, etc in my calculations.  Just Salem.  They include a wider birth of zip codes in their data, where I pull by address and not zip code.  In fact,  the CoreLogic data showed a 16.4% increase in the foreclosure rate for the zip of 97307, which is the zip for PO boxes.  What I don’t know is if they have any doubling up of their data with two addresses (the physical address and the PO address).   Apparently,  people with PO boxes in 97307 are late on their mortgage payments lately.

Salem Oregon foreclosures

While I do think shadow inventory is important because at some point it will hit the market, I also care about how many physical properties are being served with default notices.  At some point we have to sell a real house and my data is showing that the number of properties being served with defaults in Salem Oregon  has in fact decreased for the second quarter in a row….by 14.3%.

So what does my data vs. CoreLogic mean for the Salem Oregon real estate market?  Pretty easy interpretation, I think.  Short term…not so hot.  That shadow inventory being tracked by CoreLogic will hit our real estate market at some point and continue to keep prices down and inventories up.  Long term…we are going in the right direction and we are starting to decrease the amount of properties feeding into the shadow inventory black hole.

If you want to see the homes for sale in Salem Oregon that are in foreclosure, just click the link, then contact me for a showing.

Data provided in this post was calculated from information received from Fidelity National Title Company.

-40 degrees…means you are freezing your hiney off in some insanely cold part of the country.

-$50 means you just bounced a check at the local grocery store.

You know sometimes a negative number is a good thing….

-10 pounds…there aren’t too many people in the country that wouldn’t sign up for that.

-11% drop in Salem Oregon foreclosure notices…give me more of that, pretty please.  I’ll be nice…well, I’ll try anyway.  No guarantees.

I don’t think it is a big secret that foreclosures have been pulling home prices downward.  It isn’t a secret, right?  I don’t want my special real estate agent card revoked because I gave out classified information here…BUT for the first time in 5 quarters, the number of notice of defaults dropped by 11%, at least according to the information I get from Fidelity National Title Company.

Now that number is still…oh,  say…four times more than normal, but a drop now means that in a year from now we will see fewer of these properties hitting the market.   With our drop in unemployment here in Salem from the 11′s to the 10′s, it is possible that this downward trend will continue.

Right now 12.2% of Salem Oregon  listings on the WVMLS are designated as distressed properties (ie a short sale or foreclosure) and 11.1% of properties that sold in Salem last month were distressed properties.  It will take several quarters to bring these numbers back to normal, but it is nice to think of the possibility that we might be past the worst of those foreclosure numbers.  Unfortunately, one quarter doesn’t make a trend and we’ll have to see what happens in the next two quarters.

Dallas Oregon Foreclosure Rates

This chart shows notice of defaults that were served in Dallas Oregon in 2009, according to Fidelity National Title Co.

In Dallas Oregon, there were 140 notice of defaults served in  2009 compared with the 94 served in 2008.   

How did that translate into the real estate world in Dallas Oregon this year?

Of the homes (regular single family and acreage properties) listed in 2009 according to the WVMLS,  35 were listed as short sales or bank owned homes.  That is 8.1% of listings.  This is one of the lower percentages of distressed properties in the area, and unlike Silverton which had a huge bump in Notice of Defaults served, Dallas’ jump is more proportional with the increase in foreclosure notices.

The future of distressed properties in Dallas Oregon?

Right now distressed properties make up 7.4% of the Dallas Oregon real estate market.  Like all of the metro cities, I would expect this number to rise due to the ongoing unemployment problems in Oregon. Unlike some of the other metro cities where I think the higher end houses will push home prices down, I think just the ongoing supply and demand problems here due to the excessive building (even moderately priced homes) will continue to pull prices down here.

If you are interested in foreclosures or short sales and want to start watching the foreclosure market, just email me to get on the list.

Silverton Oregon Foreclosure Rates

This chart shows notice of defaults that were served in Silverton Oregon in 2009, according to Fidelity National Title Co.

In Silverton Oregon, there were 110 notice of defaults served in  2009 compared with the 51 served in 2008.  This 115% increase is one of the worst in the Salem Metro market, barely coming in less than Salem’s 119% increase.  Yuck.

How did that translate into the real estate world in Silverton Oregon this year?

Of the homes (regular single family and acreage properties) listed in 2009 according to the WVMLS,  34 were listed as distressed properties (ie short sale OR foreclosure).  That is 10.8% of listings which is lower than both Salem and Keizer which are over 11%.

The future of distressed properties in Silverton Oregon in my opinion?

Right now distressed properties make up 9.5% of the Silverton Oregon real estate market.  Of potential concern is the large number of default notices, yet the number of active listings isn’t showing as being distressed.  This is potentially concerning because of the large increase in notice of defaults: there should be a corresponding large increase in short sales on the market.  If home sellers have some equity to sell and be able to clear title, then this is a good thing for sellers because they won’t have the foreclosure or short sale ding on their credit.  If home sellers are just not putting their homes on the market, then that is a whole other concern.  Short sales seem to depress real estate values less than foreclosures do since they tend to sell at less of a discount than foreclosures do.  If these homes don’t hit the market as short sales, but rather foreclosures, then home prices will absolutely continue to drop in Silverton.  A 10% drop in real estate values in 2010 in Silverton Oregon is a very real possibility with the current market dynamics.

If you are interested in foreclosures or short sales and want to start watching the foreclosure market, just email me to get on the list.