Having said all of this the latest two acquisitions in Southern California  are bringing in cash on cash returns of 9.25 and 9.41 %.  Both are fully rehabbed and rented with an minimum of down time.  We have three more properties in the hopper which are set to close in the next 15-45 days.  As We have stated earlier we truly believe 2010 to be the year of the short sale so some transactions seem to linger a little while longer than others.  For more details about the latest purchases please contact Sean Mills at 949-891-1544 or via email at smills@ardorcapitalpartnersllc.com, thanks.  Up and coming posts will be before and after posts of rehabs.  Keep coming back for the latest news. -Sean

From FirstAmerican Core Logic:

…more than 11.3 million, or 24 percent, of all residential properties with mortgages were in negative equity at the end of the fourth quarter of 2009, up from 10.7 million and 23 percent at the end of the third quarter of 2009. An additional 2.3 million mortgages were approaching negative equity at the end of last year, meaning they had less than five percent equity. Together, negative equity and near-negative equity mortgages accounted for nearly 29 percent of all residential properties with a mortgage nationwide.

Negative equity means the mortgage balance is higher than the value of the home.

The bulk of underwater properties are concentrated in five states: California, Florida, Nevada, Arizona and Michigan. Nevada leads the way in terms of most homes with negative equity at a whopping 70 percent.

“Home-ownership” is badly defined by, for instance, the Census Bureau, which considers all “owner-occupied housing units” in its calculation of the home-ownership rate.

But the rate would be far lower if one simply calculated the amount of equity that Americans have in their homes. Since this is the portion of real estate for which they don’t pay anything, it is the only portion that is truly “owned.”

Subtract folks who owe more on their homes than they are worth and the home-ownership rate drops from 67% to 43%.

Update: Reader Dan Hess offers a better calculation in the comments. He correctly notes that underwater homes are 24% of homes with mortgages, not 24% of all homes as I implied in the math above. Backing out these homes would reduce the homeownership rate to 57%. Though backing out ALL mortgage debt, even on homes with owner equity, would lower the ownership rate even more.

This isn’t merely academic. Having equity in their homes is a big reason homeowners keep paying their mortgage, which is necessary for banks to stay solvent.

Source Article

“We start 2010 with some early signs of stabilization in the housing market, with house prices and home sales likely nearing the bottom sometime in 2010. We expect that low mortgage rates, relatively high affordability and the homebuyer tax credit will help continue to fuel the recovery. Still, the housing recovery remains fragile, with significant downside risk posed by high unemployment and a potential large wave of foreclosures.”
Freddie Mac Chief Executive Officer Charles E. Haldeman, Jr.

The quote is from the Freddie Mac Q4 earnings release:

Freddie Mac Releases Fourth Quarter and Full-Year 2009 Financial Results Fourth quarter 2009 net loss was $6.5 billion. After the dividend payment of $1.3 billion to the U.S. Department of the Treasury (Treasury) on the senior preferred stock, net loss attributable to common stockholders was $7.8 billion … for the fourth quarter of 2009.
…
Full-year 2009 net loss was $21.6 billion. After dividend payments of $4.1 billion during the year to Treasury on the senior preferred stock, net loss attributable to common stockholders was $25.7 billion … for the full-year 2009.

Another $7.8 billion in losses …

The number of U.S. households facing foreclosure in January increased 15 percent from the same month last year, and a surge in cash-strapped homeowners who’ve fallen behind on mortgages could be on the way.

More than 315,000 households received a foreclosure-related notice in January, RealtyTrac Inc. reported Thursday. That number is down nearly 10 percent from 349,000 in December, which saw the third highest total since the company began tracking foreclosure data in 2005.

In January, one in 409 homes were sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions. Banks repossessed more than 87,000 homes last month, down 5 percent from December but still up 31 percent from January 2009.

January marked the 11th straight month with more than 300,000 properties receiving a foreclosure filing. The numbers could stay above that level as unemployed homeowners who have tried to keep up with their mortgages finally start missing monthly payments.

Mortgage financier Fannie Mae reported in late January that the rate of borrowers who have a conventional loan on a house and are seriously delinquent was 5.29 percent in November, more than doubling the rate of 2.13 percent in November 2008. Borrowers are considered seriously delinquent if they are past due by three months or more, or are in foreclosure.

“There’s a lot of foreclosures in the pipeline, and the number is going to continue to get bigger,” said Patrick Newport, an economist with IHS Global Insight.

Last month’s foreclosure activity followed a pattern similar to that of a year ago, when a double-digit percentage increase in December was followed by a 10 percent drop in January.

The dip in January’s numbers may be due to processing delays by lenders during the end-of-year holidays, said Rick Sharga, senior vice president of RealtyTrac, which is based in Irvine, Calif.

“I don’t think it’s an early sign of the coming of the end of the foreclosure crisis,” Sharga said.

A record 2.8 million households were threatened with foreclosure last year, and the numbers are expected to rise to between 3 and 3.5 million homes this year, RealtyTrac said.

Slowing the foreclosure rate is a key step in the recovery of the real estate market and the overall economy. The foreclosure crisis forced the federal government and several states to come up with plans to prevent or delay the process to help delinquent borrowers.

Foreclosed homes are usually sold at steep discounts, so they often lower the value of surrounding properties. Cities lose property tax dollars from foreclosure homes that sit empty and from declining home values, straining local economies. Home prices have stabilized in some cities, but are still down 30 percent nationally from mid-2006.

Economic issues, such as unemployment or reduced income, are expected to be the main catalysts for foreclosures this year. Initially, subprime mortgages were mostly the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

Among states, Nevada posted the nation’s highest foreclosure rate, followed by Arizona, California, Florida and Utah. Rounding out the top 10 were Idaho, Michigan, Illinois, Oregon and Georgia.

The metro area with the highest foreclosure rate in January was Las Vegas, with one in every 82 homes receiving a foreclosure filing. It was followed by Phoenix and the California cities of Modesto, Stockton, and Riverside-San Bernardino-Ontario.

Source article

California Housing Losses By County and City

So while you may think the economy is improving a bit, that doesn’t mean that the foreclosure crisis is improving.

But what about that government’s Home Affordable Modification Program (HAMP) which is supposedly helping hundreds of thousands of borrowers to avoid foreclosure? Well it is, but it’s not keeping pace with the problem. 

The MBA reports that in Q3 the seasonally adjusted delinquency rate rose to 9.64 percent of all loans outstanding, up 40 basis points from Q2. Loans in the foreclosure process rose to 4.47 percent, up 17 basis points from Q2. Add it up and 14.41% of all loans in the U.S. are either delinquent or in foreclosures. Do I really need to tell you that that’s a new record?

Now for a few caveats. Many the loans that are in the modification trial period under HAMP (which is supposed to be three months) are listed in the 90-day+ delinquency bucket, so it’s quite possible that those loans will not go into foreclosure. However, the increase in the overall delinquency rate was driven by prime, fixed-rate loans, and those are loans that are far harder to modify. Why? Because they’re not delinquent due to some reset or faulty loan product or bad underwriting, they’re going bad because the borrower has lost his/her job and has no income. The bank can try to wait it out a few months to see if the job situation changes, but it’s likely that loan is going to fail, period.

Should I get started on the FHA now? You know I have to. Here’s the MBA’s work:

The foreclosure rate on FHA loans also increased, despite having a large increase in the number of FHA-insured loans outstanding. The number of FHA loans outstanding has increased by about 1.1 million over the last year. This increase in the denominator depresses the delinquency and foreclosure percentages. If we assume these newly-originated loans are not the ones defaulting and remove the big denominator increase from the calculation results, the foreclosure rate would be 1.76 percent rather than 1.31 percent reported.

So just go back to 10th grade math. You would think that if there were so many more FHA loans in the total pool that even if the delinquencies bumped up a bit, the percentage share would decrease. Not so, because a whole lot of FHA loans are going bad.

“Yesterday’s subprime is today’s FHA,” said Toll Brothers [TOL  19.99    -0.52  (-2.54%)   ] CEO Bob Toll at a UBS home builder conference in New York.  “It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money.”  And that from the luxury home builder.

One more thing from the MBA:

The number of loans 90 days or more past due or in foreclosure is now a little over 4 million as compared with 3.9 million new and previously occupied homes currently for sale, although there is likely some overlap between the two numbers. The ultimate resolution of these seriously delinquent loans will put added pressure on the hardest hit sections of the country.

Yes, four states (CA, NV, AZ, FL) continue to bear the brunt of the crisis, accounting for 43 percent of total U.S. foreclosures. 25 percent of all loans in Florida are in trouble. But the problem is spreading, especially in the Carolinas and Georgia and in states you might not expect like Utah.

I’d feel a little better about it if I had any idea whatsoever how many of the loans in the government’s trial modification program are actually performing well with the new payments, but alas we still have nothing from the Treasury Department on that. I put in yet another request yesterday for an interview with the HAMP czar, Michael Barr, but was once again declined.

I realize it may be too soon to tell how many loans have gone into permanent modifications because excess paperwork is dragging out the process and lenders are offering extensions, but by now Treasury must know at least how many borrowers in the program have missed a payment and, under the supposed rules, been disqualified.  If that number is small, great! Just tell us, because the way things are going right now, a double-dip in housing is seeming less and less like a theory and more like the status quo.

Source Article

ForeclosureRadar.com reports investors bought 337 houses and condos at foreclosure auctions, known as trustee’s sales, in Orange County last month, up 21% from September and 157% from a year earlier.
Properties sold to investors are the blue columns in the chart (click for larger image). It’s clear from the chart that this year investors have been increasing their auction purchases. (The red columns are properties that became real estate owned, REO).
ForeclosureRadar reports that statewide the trend is the same; investors are competing more vigorously for auctioned properties:
Many auction investors are gaining confidence that they can make money reselling homes purchased on the court house steps, given the limited supply of homes available on the MLS and continued demand stimulus in the form of tax credits and low interest rates.

According to NAR, the industry group’s pending home sales index rose 6.1% in September, compared with the 0.1% fall in the index that economists were expecting.

Pending home sale activity is now 21.2% higher than it was a year ago, NAR said, making it the largest annual increase in pending home sales on record. The index is also at its highest level since December 2006. CLICK HERE TO READ THE ENTIRE ARTICLE

Oct. 30 (Bloomberg) — Billionaire investor Wilbur L. Ross Jr., said today the U.S. is in the beginning of a “huge crash in commercial real estate.”

“All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. “Occupancy rates are going down. Rent rates are going down and the capitalization rate — the return that investors are demanding to buy a property — are going up.”

U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to property research firm Real Capital Analytics Inc. The Moody’s/REAL Commercial Property Price Indices already have fallen almost 41 percent since October 2007, Moody’s Investors Service said Oct. 19. Read the rest of article click here