Let’s have a more detailed look at foreclosure activity for October in King, Snohomish, and Pierce counties. First up, the Notice of Trustee Sale summary:
October 2009
King: 666 NTS, up 4% YOY
Snohomish: 323 NTS, down 2% YOY
Pierce: 385 NTS, down 36% YOY
Foreclosure notices dipped a bit in all three counties last month. Unfortunately the foreclosure rate seems to historically be an extremely noisy measure, alternating up and down month-to-month nearly every month, so we can’t really read much into this particular one-month dip. And, thanks to SB 5810 (more on that here), the year-over-year numbers aren’t particularly useful right now, either..
Here’s a simple look at how October’s foreclosures compare to the same month last year in each of the three counties:
Next let’s look at the percentage of households that received a Notice of Trustee Sale (based on household data for each county from the American Community Survey, assuming linear household growth between surveys):
King County came in at 1 NTS per 1,185 households, Snohomish County had 1 NTS per 816 households, and Pierce had 1 NTS for every 774 households (higher is better).
According to foreclosure tracking company RealtyTrac, Washington’s statewide foreclosure rate of one foreclosure for every 822 households was 29rd worst among the 50 states and the District of Columbia (down from 23rd last month, possibly still due to SB 5810). Note that RealtyTrac’s definition of “in foreclosure” is much broader than what we are using, and includes Notice of Default, Lis Pendens, Notice of Trustee Sale, and Real Estate Owned.
Here’s a look at King County’s Notices of Trustee Sales along with Trustee Deeds (which represent one way that a bank can actually complete the foreclosure process and repossess a house).
496 Trustee Deeds in King County set a new record, and was higher than the volume of Notices of Trustee Sales seen anytime prior to Q2 2008.
In case you’re curious, here’s one reason that I believe the current downtick in foreclosures is the result of the state legislation rather than an underlying fundamental trend of easing pressure on mortgage holders:
Since 2000, the unemployment rate and the foreclosure rate have tracked fairly close to each other. It seems doubtful that we will see a significant reduction in the rate of distressed mortgage holders while still experiencing a rising unemployment rate.
Following are the usual charts of King, Pierce, and Snohomish County foreclosures from January 2000 through October 2009. Click below to continue…
Only July of last year was higher than October’s reading of 666.
July and October of last year came in higher than October of this year in Snohomish.
Pierce County actually dropped below the levels set in every single month of 2008.
Note: The graphs above are derived from monthly Notice of Trustee Sale counts gathered at King, Snohomish, and Pierce County records. For a longer-term picture of King County foreclosures back to 1979, refer to the final chart in this post. For the full legal definition of what a Notice of Trustee Sale is and how it fits into the foreclosure process, check out RCW 61.24.040. The short version is that it is the notice sent to delinquent borrowers that their home will be repossessed in 90 days.
I would tend to agree that the change is likely greatly due to the legislation, and go further and say that these numbers will be pretty worthless for about another six or eight months. However, I think there’s one other factor that might possibly be at play. I’m not sure how many “teaser rate” mortgages there are adjusting up right now. I would suspect that might have peaked some time ago. I’m not just talking about variable rate mortgages set to adjust, but mortgages that would adjust upward significantly no matter what happened to interest rates since the mortgage was created.
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Another question to be answered is When is the Foreclosure tallied as a Foreclosure?
I am personally aware of a SFD which sold to the bank on Friday Sept 25 in Pierce Co. Yet, the public record still shows the private owner of record.
When I contacted the Trustee to inquire about whether the sale had in fact occurred as I thought or perhaps it had been Postponed, his response about the delay in transferring title at the Auditors office was “ummm yes, that is up to the investor” (BOA).
I have observed that other Trustee sales appear on the public record rapidly. I wonder what the effect is on the statistics when lenders decline to record the Deed.
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RE: Haybaler @ 2 – I’ve seen that in the past many years ago, so the real question would be is that occurring more now than before? Sometimes it can be the result of some question about the procedure that might have them start over.
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I suppose it’s obvious,
but it looks like foreclosures track even better with unemployment during the years that people were biting off way more than they can chew.
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RE: Anon. @ 4 –
I think many of them were biting off exactly how much the could chew, but any change could sink them.
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Foreclosures are being DELAYED big time due to the Loan Mods being conducted. Wait till your neighbor and brother find out what Sally got for not paying 6 months on her Mtg. Good Lord! I keep seeing free refi’s , 5% across the board, forgiveness of past due interest, and bringing account current.
Two things we have NOT seen here at 500.
a) Principle reduction (Mtg Cramdown-if anyone has gotten this please advise) because in the end this is all that will work anyway. People must move. We are a mobile society and it will either be a short sale or foreclosure at some point this decade.
b) A Loan mod with a Cash out option……HAAA…You never know……..
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RE: Ray Pepper @ 6 – Take a look at this:
http://www.calculatedriskblog.com/2009/11/unsolicited-principal-reduction-offer.html
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Apples and Oranges
Tim has documented about 600 foreclosures per month in King County, but its dumb to compare that to all homes in King County. Using the 13,388 homes for sale in King County from Windmere:
http://eastsiderealestatebuzz.com/2009/10/01/in-king-county-less-homes-condos-is-more/
I’d use the fact that of the King County Homes for sale, 4.5% (600/13,388) of that quantity are numbered foreclosed homes as of Q3 2009.
Now that sounds much more horrifying (like 1 in 20), let’s be honest and pragmatic.
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RE: softwarengineer @ 8 – I’m not sure what you’re trying to say. The 600 figure isn’t of actual foreclosure sales, and the 13,388 number seems too large, unless it’s also condos too. If you really wanted to make comparisons it would be to actual sales (foreclosure, normal and REO).
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I’m wondering if there is a way to measure distress accurately? My neighbor defaulted on a $500K loan 1 1/2 years ago. The first auction was stalled because of the moratorium. The most recent auction never happened, apparently because the bank doesn’t want to take it on the books.. I’m curious to see if the neighbor gets a full 2 years of free rent before the bank lightens up on the “extend and pretend” games.
My neighbor on the other side defaulted on a $600K loan. His auction date came and went last summer. He’s still living there rent free with no word from the bank.
Are any distressed homes actually foreclosing? It makes me wonder if the banks are even sending out NTS’s anymore?
That being said, the Seattle area doesn’t have anywhere near the number of risky loans as the most bubbled up states, so I don’t expect things to get as bad here as elsewhere.
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By Jonness @ 10:
I’ve never really understood banks and their foreclosure processes. Sometimes they are fast an inflexible when they don’t have much at risk at all, and sometimes they’re slow. One thing you might want to check though is whether your neighbor filed a bankruptcy case. If there’s a significant delay in a foreclosure, past 4 months from the original foreclosure date, often it would be due to a bankruptcy.
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RE: Kary L. Krismer @ 11 – That’s an interesting point, I hadn’t considered. Both neighbors were/are self-employed builders. Thus, they can’t draw unemployment benefits and are barely scraping by on what little work they can manage to dredge up. For them, this is a depression. Now that I think about it, I would be surprised if they hadn’t filed for bankruptcy.
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RE: Jonness @ 12 – Contractor bankruptcies are a actually a good indicator for the economy. During normal times there are a few that file, and during really good times almost none. During bad times a ton of them. I would guess right now there are a ton of them.
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[...] notices bumped back up again in all three counties last month. As we pointed out last month, the foreclosure rate is a rather noisy measure, alternating up and down month-to-month nearly [...]
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