The headlines look good. Today Realty Trac reported that US foreclosure and filings are now at the lowest rate in past five years-with California Leading the way. Now -like I always say- dont believe everything you read. Headlines sometimnes sound good but the devil is in the details:
California, the state that led the U.S. into the housing boom and bust with some of the most reckless subprime mortgage lending, is now leading the way out.
A plunge in new defaults in California helped push U.S. foreclosure filings to the lowest level in almost five years, according to RealtyTrac Inc., a seller of home-loan data. Across the country, 531,576 properties received notices of default, auction or repossession in the third quarter, down 13 percent from a year earlier and the lowest since 2007. One in every 248 households got a filing, RealyTrac said today.
From the LA Times:
Substantial decreases in California and some other states hard-hit by the collapse of the housing bubble helped reduce filings to 180,427 last month, down 7% from August and 16% from a year earlier, according to foreclosure listing firm RealtyTrac.
The last time filings were that low was in July 2007.
It is funny how we are a “headline” society. But if you follow up you will see that Banks combined with recent legislation- Have basically stopped foreclosing on anyone. Today we are in a society where the banks are subsidized by the federal goverment to not foreclose. Why should they foreclose? Banks dont have to Mark to Market the properties as per current values on their books, and the fed is more than happy to pay for the banks losses,taxes and insurance for the non-performing loans. This all means that the banks have no incentive to get these properties off their books. None. And Now the Fed is buying distressed MBS assets. All this equals more foreclosure declines to come and continued housing crisis over headlines to follow.
Though the headlines would appear that the worst may be over- It may be over for all the wrong reasons. Artificial or Natural? that is the question.