Defaults Down 35 Percent from a Year Ago
Throughout 2009, a common theme was the existence of “shadow inventory” and
the growing presence of mortgage defaults. Now, in 2010, all the talk has stopped and investors betting on a continued down market are looking towards other statistics to support their theory. But, before we begin to analyze new arguments, lets look at why the previous talk about shadow inventory and defaults stopped.
Banks filed 1,535 notices of default in Orange County in December, down 35 percent from a year ago and 18 percent from November ‘09, reports MDA DataQuick. The lowest levels since September of 2008.
Default notices, which start the foreclosure process, have been trending down since reaching a peak of 3,485 in March 2009. They have declined each of the past five months.
Foreclosures totaled 796 houses and condos last month, up 18 percent from November and 11 percent from a year ago. Foreclosures generally increase from November to December, but the total was also the highest in five months. One data point does not signify a trend, but it will be interesting to see if banks work on their foreclosure backlog in coming months while starting the foreclosure process on fewer homes.
Take a look at the default and foreclosure numbers below:
Despite the tragedy of so many people losing their homes to foreclosures, it is an inevitable process. One home lost, is a new home for another; and the foreclosures are being purchased. It wouldn’t be such a bad thing if more bank owned homes were on the market, but unfortunately investors are purchasing the REOs in bundles. Each month more and more homes are being purchased by investors and flipped for a quick profit. Below is a graph illustrating the number of foreclosed homes purchased either through REO or by an investor.
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