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Sunday, January 27, 2008 12:04 AM

Real Estate Auctions Booming

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The real estate auction business is booming. Real Estate Disposition Corp is auctioning 2,000 homes in California and 575 in DC, Maryland, and Virginia. More states are coming up.

click on image for enhanced view.

Following is a random sampling of listings.
Some are "real beauties".

Item 247A

Item 252B

Item 240

Item 20

Item 249

Item 250

Item 272

Item 327

Item 600B

Item 604B

Item 664A

The only way some of those houses could have sold at the previous value is out and out fraud. Many of the opening bids are preposterous. Even still, there are going to be enormous losses if the homes go for the opening bid. Some won't sell for half the opening bid. They will be back on the auction block again, hopefully with more realistic opening bids.

FirstFed hit by delinquent loans

The LA Times is reporting First Federal Bank of California Net Income Plunges.

FirstFed Financial Corp., parent of First Federal Bank of California, reported that net income plunged 75% to $8.41 million in the fourth quarter because of delinquent home loans.

FirstFed shares slumped $2.93 to $36.07.

Net income was 61 cents a share, compared with $33.4 million, or $1.97, in the same period a year earlier, the Santa Monica-based company said.

Single-family home loan delinquencies led to an increase in the provision for losses to $21 million, compared with $3 million a year earlier. Adjustable-rate mortgages contributed to the higher level of delinquent loans, the company said.
California Defaults Soar

The above chart from DQNews.

California Foreclosure Activity Still Rising
The number of mortgage default notices filed against California homeowners jumped last quarter to its highest level in more than fifteen years, a real estate information service reported.

Lending institutions sent homeowners 81,550 default notices during the October-to-December period. That was up by 12.4 percent from 72,571 the previous quarter, and up 114.6 percent from 37,994 for fourth-quarter 2006, according to DataQuick Information Systems.

Last quarter's number of defaults was the highest in DataQuick's statistics, which go back to 1992.

"Foreclosure activity is closely tied to a decline in home values. With today's depreciation, an increasing number of homeowners find themselves owing more on a property than it's market value, setting the stage for default if there is mortgage payment shock, a job loss or the owner needs to move," said Marshall Prentice, DataQuick's president.

Of the homeowners in default, an estimated 41 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was about 71 percent. The increased portion of homes lost to foreclosure reflects the slow real estate market, as well as the number of homes bought during the height of the market with multiple-loan financing, which makes 'work-outs' difficult.
Bottom Fishers Beware

As go defaults so goes auctions. The auction business is going to be booming for a long time to come and prices have much further to drop.

Note: I am doing a live radio show every Wednesday on the Charles Goyette show KFNX. Those interested can click on the MP3 player on the upper right of the blog to hear an audio recording.

Mike "Mish" Shedlock
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