Georgia was 10th in foreclosures in January, but the worst may yet be still to come

Georgia was 10th among the states last month for foreclosure filings with 11,274. Those included default notices, scheduled foreclosure auctions and bank repossessions. This number was down 13.1 percent from the previous month. But the light at the end of the tunnel is most definitely not in sight yet. Here’s why:

It’s not my goal to be Debbie Downer, but there are even more serious days ahead. Doubly so with reports that Georgia’s income tax revenue fell about $137 million in January.

That said, I do note that 95,264 laid-off workers filed initial claims for unemployment insurance benefits in January, a decrease of 5,632, or 5.6 percent, from 100,896 in December. Hardly a sustainable recovery at this point…more that the bleeding may be slowing to a very limited degree.

35 comments

      • B Balz says:

        The numbers are quitely disturbing. Some would have us believe that deeply eroded commercial RE values relative to existing loan amounts will be carried forward, “Extend and Pretend”. Laws are being changed, right now, to allow this to occur.

        Spooky confluence of interrelated events.

        • polisavvy says:

          At this point, almost all the information we receive, relative to the economy, on a daily basis is disturbing to me.

  1. ByteMe says:

    You are correct, sir! What we’re going to see is another strong wave of foreclosures, home depreciation, and at least another 1000 bank closings in the coming year.

    • Mozart says:

      Yay for Obama! His recovery plan is working perfectly. As in “recovery” for all the folks who have placed bets on down markets, put options, and billion-dollar insurance polices on the one-in-million chances their buildings might get hit by an airplane piloted by a terrorist.

      • polisavvy says:

        Well, I hope you’re ready for the onslaught on stuff that will be coming your way because of your statement about Obama. Glad I’m protected by a computer screen! 😉 Won’t want to be in your shoes (though I do agree with you)!

  2. bgsmallz says:

    Good gracious….can “Pete Randall” ever actually cite a source so you can put something like this graph in context? Of course, splicing information and retooling it to fit an agenda is par for the course for Petey. You cheapen your opinions by not acknowledging and rebutting the opinions of the opposite view.

    Anyway, AP article in the AJC stating a similar idea but pointing to job losses, etc. as the cause rather than adjustable rate mortgages.

    http://www.ajc.com/business/foreclosures-down-in-january-297624.html

    • ByteMe says:

      The graph is the amount of mortgage resets scheduled for each month from here to 2012. Resets are what happens when a mortgage starts at a fixed “teaser” rate and then “resets” to either a floating rate or some higher rate, depending on the mortgage. Subprime mortgages reset early; alt-a and many prime mortgages are coming over the next two years. And in the reset comes the need to either re-finance (if the house is worth at least the value on the mortgage, which is unlikely) OR stick with the higher rate and pay for a house that isn’t worth the mortgage payment OR walk away and make it the bank’s problem. Many will choose the last option.

      • bgsmallz says:

        Pete-

        I saw the references on the graph. I went to both of the web sites before I posted.

        But help me out with this, Pete. Were there not any words or explanation that went along with this graph? If I go to http://www.agrofinancial.com am I going to find the graph with nothing else in the middle of the page?

        While I am a big fan of “smart alec-ry” responses…I would love to see what the producers of the graph aka T2 partners and Agrofinancial said about this graph rather than have you spoon feed me whatever drivel you are selling this week. How about a hyperlink to the agrofinancial article that references the graph this time?

        Did you not learn how to cite sources in _________ (insert level of schooling into blank)? For example, if you take a graph from a book, you would typically cite the author, title, publisher, and if it was a direct quotation, as copying and using someone else’s graph most certainly is, you would include the page number, too.

        Accordingly, when you cite a website, you would give a detailed hyperlink of where you took the information from that you are quoting…

        Here is a good example how it works.

        Pete Randall citation:

        “I think it is hilarious when a pompous windbag like Pete attempts to project his own d-baginess onto others. Its like I said to someone the other day, when you are so predictable that I know what you are going to say before you even say it, its kind of a waste of time to even open your mouth.”

        http://www.peachpundit.com.

        Here is the better and what I would consider correct citation.

        “I think it is hilarious when a pompous windbag like Pete attempts to project his own d-baginess onto others. Its like I said to someone the other day, when you are so predictable that I know what you are going to say before you even say it, its kind of a waste of time to even open your mouth.”

        -comment by mitchmartin, http://www.peachpundit.com/2010/01/13/a-tale-told-by-an-idiot-full-of-sound-and-fury-signifying-nothing/

        See the difference?

        Take care!

        • AlanR says:

          So what’s your point? We’re not headed for some very serious real estate problems because Randall doesn’t meet your high standards for academic notation?

        • ByteMe says:

          Pete would have hyperlinked “pompous windbag” to the article or maybe his own Facebook page. That’s how the professionals do it. 🙂

  3. As we’re in the middle of trying to acquire a foreclosed property from a bank right now, I’m hoping they’ll take this impending crisis as a good reason to unload the property on the cheap. I foresee property prices continuing to decline over the next couple of years before they start going back up and more properties on the supply side than the demand side.

    • seenbetrdayz says:

      How dare you to take advantage of the failed plan to ensure that housing was made affordable for all Americans and exploit that to buy a house that you can afford.

      • John Konop says:

        The biggest problem in the housing market is jumbo loans over 400k. That was not poor people, it was middle class people acting like a rich people without the money.

        • IndyInjun says:

          No, the biggest problem was FRAUD.

          From 2001 to 2004, Georgia was either #1 or 2 in mortgage fraud in the USA, according to the annual reports of the MARI.

        • John,

          I know a couple, both retired (him: retired military and short-term retirement from private business; her: retired from a private manufacturer) and living on fixed income.

          The agent that sold them the house that was more than they could afford, did so with an ARM even though they are both on fixed incomes and he is 80% disabled. To the best of my knowledge, there were no limits on annual increases.

          They lost the house – and the equity they put in from the sale of their previous house which was 100% mortgage free.

          Obviously, they should have made better decisions but they trusted the agent and didn’t even ask their adult daughters for input. The husband’s health problems have affected his judgment and the wife has never handled financial decisions before. It’s a sad story, but I suspect similar stories exist all over this state.

      • Actually, it’s a farm. Someone bought a horse farm back in 2002 to turn it into a subdivision. Six years later, they ran out of money and never did anything to the property other than let it sit there. We’re just looking to turn it back into a horse farm. Silly developers… you can’t overbuild everything! 🙂

  4. AubieTurtle says:

    At a previous employer the manager for the project I was on told us that we should all buy as much real estate as possible. It didn’t matter what the property was because it all would keep going up. Sadly I was the only one who thought he was talking like a crazy person. Even though the business wasn’t related to real estate (we had a few clients in that area), I knew it was time to get out. Any place so packed to the gills with get rich flippers had to have lots of other problems.

    Looking at the graph, it appears that it’s only the Option ARMs that are going to be a big deal (which isn’t to say that’s not a big deal on its own). The other categories don’t appear to spike that much. A bit of a morbid coincidence that the peak appears to be right around 9/11/11.

  5. IndyInjun says:

    Thanks Pete, for posting this.

    You did a nice job of coupling the graph to the Georgia economy.

    I would like to see more discussion like this on PP.

    Donkey Kong and I used to get in heated discussions over the then-looming catastrophe that I said was coming but he and others denied, but then I have a tendency to get in heated arguments on PP, period.

    There is more to it than this graph.

    A lot more.

    This will be the biggest story of our lives.

  6. Republican Lady says:

    I think the unemployment numbers are higher than reported because many people who have run out of unemployment benefits are still looking for jobs, still unemployed.

    As for the foreclosures, Georgia starts the procedures after 60 days of nonpayment. Since the banks got taypayer bailouts, the banks should work with those having problems making house payments to get through this economic crisis.

    There are two benefits to the banks; the houses aren’t left vacant to be vandalized, and the properties will be maintained. Perhaps the banks could cut the mortgage payments in half for six months or a year and tack the time on the back end of the mortage.

    The way the banks do now, more people become homeless and take up other resources that would not be used if the banks took a different approach.

    • IndyInjun says:

      RL, Look at the video I posted the link to. It shows that banks are getting deals from FDIC whereby they really don’t rush into selling because the government is bearing 80% of the ‘losses’ and the ‘losses’ are based upon stated value of the original loan plus missed payments.

      You made a very good point about the unemployment. One gets a better grasp from the numbers of folks falling off the UI rolls and onto Federal Emergency Unemployment. There are as many people, more than 5 million countrywide, on EUC as on state benefits.

  7. Republican Lady says:

    I’ m not an economist and I don’t pretend to be, in fact I hated those courses in college. I understand what you are saying on some level but what I don’t understand, and maybe you or “Byte” can explain to me, is why don’t the banks see it could benefit them in the long run if they changed their foreclosure policies and work with the homeowner?

    Please explain it in simple terms, I won’t be offended. This is just not my area.

    • polisavvy says:

      Excellent question and one that I would like answered, too. I always thought that “a bird in the hand is worth two in the bush.”

    • Captain Phatbeard says:

      I have been told by bankers that the FDIC is ordering them to clear distressed loans off their books.

    • IndyInjun says:

      Case 1 – Well, if the bank has IndyMac’s deal, it doesn’t want to foreclose, because the government is paying 80% of the loss as established by the original loan, plus all missed payment, minus the foreclosure sale price. This means that the bank can sit for many months because a 25% profit on the foreclosure trumps any settlement with the existing borrower PLUS the bank can enter a deficiency judgement against the homeowner/borrower for a portion of the ‘loss.’ On top of it all the bank gets its fees on the resale and extracts them from the original borrower.

      Case 2 (what I think you are asking about)In a straight loan origination/processing/holding scenario where the bank keeps the loan – there really aren’t too many of those because most mortgages were fed to securitization mills (discussed below) – the banks don’t want to recognize a loss by renegotiating the loan because it 1) Impacts their capital ratio adversely 2) gives rise to marking other troubled loans in that neighborhood to the same value and encouraging other borrowers to muscle the bank into the same or better deal and 3) the suspension of mark-to-market accounting rules to permit what used to be fraud allows bad mortgages to be hidden indefinitely while bank execs keep salaries and bonuses.

      Case 3 – If your loan is securitized things are much, much worse. Basically your loan is welded to 1000’s of others and the whole mess is PROPERTY of some third party. Extracting good or bad loans is problematic. The owner doesn’t want to release good loans and he doesn’t want to take the hit on the bad. This seems to be moot, because there is no market for these market securities.

      Basically what happened was that mortgage securities brought forward the total economic value of loan transactions for years, extracted all manner of fees, and left complex instruments that take uneconomic legal and accounting costs to remediate. This is why the financial system nearlycame down. The cost to remediate is so high, that the mortage securities (1000’s of individual loans) were found to be worth 10 cents on the dollar. The Financiers panicked. The Fed bailout is the only market for the securities, which will likely NEVER be worth more than 30 cents on the dollar in an free market.

      A loan that is caught up in a security is probably in legal limbo.

      If this all frightens you, it should.

  8. brian.holcombe says:

    good chart and graphics! My friend Lee Ferrell has to pay his sister’s mortgage to keep her from foreclosure – there are probably a lot of other people in that boat who are keeping their homes due to help from parents, friends, or siblings

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