The imminent ARM resets are beginning. Downsizings, closings and the chaos of recession are getting rampanter and rampanter(sic).Short sales are increasing as underwater owners try to evade foreclosures. Of course short sales are usually excruciatingly slow, apt to fail and a trial for principals but can result in excellent values for buyers. Regulation and legislation change often now as solutions emerge, it probably isn’t over yet regarding new opportunities. One should look closely for opportunity and be prepared to act. I recommend concentrating on particular deals or opportunities and reserving market analysis for the future with hindsight in hand.
I betcha if 'ya keep an close eye on the MLS you'll watch golden opportunities flash right by. Maybe try a suite of Home Alert notifications for different set of criteria. There is another opportunity to access new listings real-time directly from the MLS but that requires your willingness to cooperate with an agent to set it up.

Questions??

Update re: ARM reset wave...

Banks put the brakes on foreclosures during the later part of 2008 due to Federal, State and self-established moratoriums. Then came the announcement of the President’s housing recovery plan. As soon as banks/loan servicers heard a plan was in the works they had additional reason to throttle back on the foreclosure process. That all ended in March after the plan(s) were announced in late February 09 - there wasn't much for the Banks/servicers to be excited about. Since then, Banks/servicers shifted their Notice-of-Default and Notice-of-Trustee Sale machines into overdrive. The foreclosure process takes about 3 months, 3 weeks and 3 days. So look for a healthy spike in supply around the end of this summer. This is the so called "REO Shadow Inventory" you may have heard of.

Hi Summer,

I have been wondering the same thing. I can share with you that the option arms have started to reset and the nod on the higher priced properties are surging. Historically foreclosures in Marin have been cured by rich relatives but who is rich anymore? The option arms are a good tool when the market is going up but very dangerous when the market is going down. It seems that August is the time frame to watch for these resets to really begin. There is a foreclosure prevention workshop in October sponsored by the Corte Madera Rec Center so we will really begin to see what happens between now and then. Take care!

Susan, generally, this would be true; however, geographic location of the REO will decide to what degree.

Case in point: There is an area known as the "MSJ Attendance Area" in Fremont. Since 8/1/08, according to MLS "Special Information" records (available since Aug/Sep of 2008), there has only been one TH and two SFR REO sales in the MSJ Attendance area.

I'm sure there are areas in SF that will have a similar non-reaction.

Best, Steve

So does this mean when these foreclosed homes come on the market they will be lower priced then before?

Hi Summer, great question, and I can help to answer part of it. First, take a look at these two charts to see the timing of the resets:

http://docs.Steven-Anthony.com/Resets.pdf (shows loan reset schedule)

http://docs.Steven-Anthony.com/OptionArmResets.pdf (shows accelerated loan reset schedule)

There was a very good article in the 4/8/09 SF Chronicle recently that explains where all the REOs are:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/04/08/…

What the article does not touch on are the "loss-share" agreements banks who accepted TARP money have just about reached (once certain losses are taken by the banks the government starts taking losses). I know for a fact that many banks are laying off their REO employees to cut cost and will be going straight to Realtors to sell properties soon. I had heard rumors that the banks were "overloaded", but now that I understand the profit motive, or shall I say "capped liability" aspect, it's easy to understand why they are shadowing the inventory.

While the moratorium enacted by the State and some lenders individually, and yes, loan modifications may have also been a material factor in slowing the wave, I put most of my money on the "capped liability" ceiling as being a great motivator and primary factor in slowing the release of REOs to market.

I believe we will see a set of waves tied to banks reaching their loss-share ceilings rather than a huge single deluge. However, you can bet they’re on their way to shore right now.

Best, Steve