Lawler: How Many Folks Have “Lost Their Homes” to Foreclosure/Short Sales/DILs?

6 Feb


by CalculatedRisk on 2/02/2011 05:30:00 PM

CR: This is an interesting question and hard to answer … the following is from economist Tom Lawler …

How Many Folks Have “Lost Their Homes” to Foreclosure/ShortSales/DILs Over the Past Few Years?

According toHope Nowestimates, completed foreclosure sales (rounded) were about as follows over the past few years.

Year Completed Foreclosure
2007 514,000
2008 914,000
2009 949,000
2010 1,070,000

 

While these numbers are disturbingly high, they are not nearly as large as one would have expected given the surge in seriously delinquent loans and loans in the process of foreclosure. For the latter, here is a chart based on data from the MBA’s National Delinquency Survey, which covers “over 85%” of total 1-4 family first-lienmortgages.MBA Delinquency
On one side, the “completed foreclosure sales” understates the number of homes “lost,” given that many homeowners have “lost” their homes but been able to negotiate a short sale or (much less likely) done a deed in lieu of foreclosure. While there are no official estimates of either short sales or DILs, there is no doubt that the volume of short sales increased dramatically in 2009 and 2010.

Using CoreLogic’s estimates and grossing them up to reflect its incomplete geographic coverage, one would get short sales estimates of around 78,000 for 2007, 164,000 for 2008, 278,000 for 2009, and 331,000 for 2010. However, based on data reported by lenders on short sales in the OCC/OTS mortgage metricsreports, the CoreLogic estimates of short sales look way too high for 2007 and 2008 (the 2009 estimates look OK, but the 2010 estimates – which admittedly are not available for the full year – look a tad low). Using instead my own estimates for 2008 through 2010, here’s what completed foreclosure sales plus short sales might look like (I don’t have a DIL estimate, but it appears as if the volume of DILs was pretty low).

Year Completed Foreclosure Sales Short Sales Total
2008 914,000 95,000 1,009,000
2009 949,000 263,000 1,212,000
2010 1,070,000 375,000 1,445,000

 

On the other hand, the above numbers could well OVERSTATE significantly the number of homeowners who lost their primary home either to foreclosure or to a short sale. A “significant” % of completed foreclosure sales has been completed foreclosures on non-owner-occupied homes, though estimates vary as to what that % has been. In addition, not all short sales have involved homeowners “involuntarily” leaving their home, but who instead wanted to (for economic or other reasons) move and who were able to negotiate a short sale with their lender.So what is the right number for folks who lost their residence to foreclosure, a short sales, or a DIL? I don’t rightly know.

It is pretty clear, however, that overall foreclosure moratoria, foreclosure delays, modifications, and other workout activity continued to keep the number of homeowners who “lost” their homes to foreclosure massively lower than one would have expected given the delinquency/in foreclosure numbers.

Year Completed Foreclosure Sales plus Short Sales Loans in Foreclosure/90+ Delinquent at end of previous year
2008 1,009,000 1,664,760
2009 1,212,000 2,859,959
2010 1,445,000 4,296,018

 

Note: the loans in foreclosure/90+ delinquent are derived from the MBA National Delinquency Survey, which only covers somewhere around 85-87% of the total 1-4 family first-lien mortgage market. A crude estimate of the “total” market would “gross up” the above numbers by around 1.163 (or 1/0.86).CR Note: This was from housing economist Tom Lawler.

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One Response to “Lawler: How Many Folks Have “Lost Their Homes” to Foreclosure/Short Sales/DILs?”

  1. John February 6, 2011 at 11:13 am #

    Tim,
    Thanks for this report. I think there is a redemption process that will be available within the next 3 to 6 months to which I am working on. That is Credit Bids.

    It appears that during the foreclosure and then sale of the home the Whoever (suppose to be Creditor) cries out to the sales person the Note of which they hold and is used as a Credit Bid to purchase the property. I have yet to see the Original Note anywhere in this process in 3 states that I have watched Sales take place.

    Forensic Mortgage Audits and Foreclosure Defense
    Quiet Title Actions
    Foreclosure Reversals
    oliver@ipa.net
    john

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