Whats Happening with Foreclosures

The most notable point is the return to 2007 levels for 30 day delinquencies, and 2008 levels for the other categories with a continuing trend lower.

click to enlarge

From Calculated Risk;

"A few comments from Mike Fratantoni, MBA Vice President, Single-Family Research and Policy Development, on the Q4 MBA National Delinquency Survey conference call.

• There was a significant drop in most measures of delinquencies.

• Overall delinquencies are still elevated, but the movement is in the right direction.

• Fratantoni expects that we will eventually see lower than historical delinquency rates because of the strong credit quality of recent originations.  In response to a question from me, he said that he expects most deliquency measures will be back to normal in "2 to 3" years, but that it will take much longer for the foreclosure inventory to return to normal because of the backlog in judicial states. Jay Brinkmann, MBA’s Chief Economist and Senior Vice President of Research added that some measures (like the 30 delinquency rate) are already back to normal, and that some measures will take longer than others.

• The FHA is showing strong credit quality for origination in 2010, 2011 and 2012. Most of the delinquent loans are from the 2008 and 2009 vintages.

Read more at http://www.calculatedriskblog.com/#qSgBqFckKpbkt2Rz.99 "

The other point to make is that states utilizing judicial process, like NJ, are creating a lot of pseudo vacancies and inventory over the market. NJ has an unbelievably slow foreclosure process, virtually closed to 3rd party participation, that takes years and years to clear. Many of these properties are NOT going to obtain certificates of occupancy without major work and are frequently rented out to groups of individuals that exceed the legal occupancy limits. As they are eventually cleared they will likely create MORE demand as illegal occupants seek new housing.

click to enlarge