1,728,000 Home Owners are Delinquent on Mortgage. Will this be the Inventory wave to Crash Prices?

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good morning good afternoon good evening

folks michael zuber one rental at a time

uh we’re going to take a look at some

foreclosure statistics if you are in the

real estate market one of the things

that we are undoubtedly going to hear a

lot about in the very near future if not

already

is foreclosures or spiking foreclosures

or problem delinquencies

all of those things we’re likely going

to hear that foreclosures will probably

lead to price crashes

so what i thought i would do is just

look at the actual information

having been an investor who bought some

foreclosures

i could tell you you’re absolutely right

foreclosures short sales typically come

with a significant discount

they are often in a distressed state so

they’re most likely not perfect

in fact i don’t remember buying a

foreclosed property that didn’t require

tens of thousands of dollars in cleanup

and repair

but that said uh i think it is important

to look at the actual information and uh

we’re gonna do that by looking at some

information from black knight i like to

use black knight because uh a they track

the stuff they have historical relevance

and they don’t have a bias

black knight is not a real estate

organization that will tell you

prices are going up prices are going up

they’re not in the real estate crash

camp price is going down prices going

down

they’re more like hey here’s the data

here’s the seasonality here’s the

historical information so i like to look

at black knight because they are

non-biased so let’s take a look

again this comes from an article uh from

someone i follow on twitter uh we’ll

give him his props real quick

um

[Music]

calculated risk is the blog it is why am

i not seeing his name

one sec i will go to my phone because i

just got it it’s bill mcbride bill

mcbride sorry i should have had that

handy bill mcbride so again we’re

looking at mortgage delinquency rates

for july it was just published on the

24th so this is

this is like

three hours old

so the first thing to look at is the

national delinquency rate delinquency is

missed a payment

it is not only mis you know doesn’t have

to be foreclosure so we’re looking at

early in the process so delinquency rate

is 2.89 in july

there was a four percent increase in

early delinquencies think missed one

payment missed two

uh it is 14 uh basis points higher than

a record low of may so

it is still statistically relevant at a

record low

serious delinquencies these are three

months remember folks we’ve talked about

the foreclosure process it doesn’t

actually it’s not even legal to start

until you’re three months down hint

called serious delinquent

uh loans that are 90 more days past due

but not yet active in foreclosure has

pulled back

after worsening for the first time in 22

months so it got a little worse in june

but got better in july really what we’re

seeing here folks is banks are acting

different

as an investor and buyer through the

last crisis i can tell you this is not

how banks operated last time

the number of seriously delinquent loans

curing which means getting fixed or

addressed has dropped steadily over the

recent months after peaking at 104 now

down to 58 so they’re

curing slower total volumes but again as

you’ll see the base is actually much

smaller as well

foreclosure starts retreated 25

i’ll say that again foreclosures down 25

from the june total of 17 grand

17 000 folks 17 000 we used to do 200

000

we are 55 below pre-pandemic levels

equating to just three percent so again

not the big wave that people keep

talking about but that doesn’t mean they

won’t keep talking

we are still at record lows right spread

more terms for brain forbidden

forbearance protections number loans

active foreclosure declined slightly to

six thousand

six thousand

prepayment activity dropped another 18

percent in july is down 67 that’s just

refi and sales so again black knight is

basically saying

uh the link so here’s the math right

here here’s their chart we’ll just close

with this so we have july of 22 june of

22 july of 21 july of 20.

so we can go back and look at last month

last year and two years ago the

delinquency rate is slightly higher than

last month right 2.89

but significantly lower

than the pandemic

foreclosures are better

they went down slightly not just barely

half a percent

properties that are delinquent

basically 1.5 million

we were as high as almost 3.7 million in

july of 2020

properties in foreclosure 184 000.

just 184 000.

so total properties in trouble about 1.7

million

so again folks

you’ve undoubtedly seen

articles about foreclosures up 400

percent 100 percent

we’re talking very small numbers there

will undoubtedly be an increase in

foreclosures i’m not here to tell you it

won’t be

but they will be double you know triple

digit 100 150 off very very small

numbers

as somebody who was buying in the last

crisis the big difference there’s two

big differences

one

banks are fundamentally

different

in the last crisis if you were 90

90 days late

you were over 90 percent likely to be

foreclosed

today you get 90 days late you’re likely

to get a loan workout

or a forbearance

banks are acting banks will just simply

not foreclose like last time i’m sorry

it’s not going to be the way that we all

want or hope for

second the loan product

last time the loan was toxic

these teaser rates would reset and the

loan payments would explode

today if you get in trouble you probably

have equity but if you don’t have equity

you probably have a fixed rate mortgage

which is probably valuable to someone

so there will be more foreclosures

undoubtedly there will be more pain

there will be more job losses it’s just

not going to be

2010 in 2011

all over again so let me know what you

think this again is sourced from black

knight black knights data take care of

yourself have a wonderful day

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