NOD Upswing

N-O-Default notices rise

A report by RealtyTrac says first-time default notices were
filed on 78,880 homes last month, marking a nine-month high and
up 33 percent from July. It was the biggest increase since
August 2007. Even so, notices were down 18 percent from the same
month last year and were down 44 percent from the monthly peak
reached in April 2009 during the tail end of the recession. The
rise in default filings did not suggest that a new foreclosure
problem was on the horizon, but that some of the backlog related
to documentation problems was being worked out of the system,
said Mr. Sharga, senior vice president at RealtyTrac.
Foreclosure activity was halted temporarily late last year due
to claims that lenders relied on "robo-signing," where documents
were signed without reviewing the case files.

Total foreclosure filings—which include default notices,
scheduled auctions and repossessions—were sent to 228,098 homes,
a 7 percent increase from July but down 33 percent from August
2010. Bank repossessions fell 4 percent to a six-month low of
64,813 homes. Repossessions have come down 37 percent from the
peak of 102,134 hit in September 2010. Nevada once again had the
highest state foreclosure rate with one in every 118 homes
receiving a foreclosure filing in August. Nevada has held the
top spot for over four years. Even so, Nevada saw a 3 percent
decrease in filings as scheduled auctions and bank seizures
eased.

Foreclosure Freeze

Housing market faces long, cold winter: Altos

Low interest rates and a glut of inventory failed to
substantially stimulate a weak housing market this summer,
according to Altos Research. Based on summer statistics and shaky
economic indicators, Altos is predicting a "long, cold winter"
with nothing on the horizon to suggest improved housing market
activity through the fall and winter. Home prices in July rose in
14 of the 20 metro areas surveyed for the Altos Research
Mid-Cities Report and inventory increased in 12 of the markets.
"The housing market in the United States is in a constant state
of flux. Volatility is the norm and the rules of yesterday's
market no longer apply," Altos said. Eight of the 20 markets saw
their housing inventory levels decline, while six of 20 markets
noted a drop in median prices. The Federal Reserve Bank of Dallas
recently said it expects home prices to bottom out by early 2012,
with market volatility somewhat limited to certain hard-hit
areas, such as Arizona, California and Nevada. The Fed said
markets like Texas, where jobs have been created during the
recession, could see the tide shift by the early part of 2012.

Finally Some Good news

S&P: Mortgage default rate drops below 2% in July

The default rate on first mortgages dropped to 1.93% in July,
according to Standard & Poor's. S&P, in conjunction with the
consumer rating firm Experian, monitors the rate of defaults
within asset-backed securities. First mortgage defaults declined
from 2.02% in June and 3.24% one year ago. Second mortgage
defaults showed a steeper drop to a rate of 1.25% in July, down
from 1.4% the month before and 2.77% last year. Defaults actually
dropped across the entire ABS spectrum covered by the two firms,
reaching a composite default rate of 2.06% in July. It's down
more than a full percentage point from one year ago. While
defaults were down, delinquencies remained elevated. According to
Lender Processing Services, the delinquency rate on mortgages
went up by 2.4% in July. More than 4.4 million loans are
considered 30 days late or worse. Erkan Erturk, a credit analyst
at S&P, said "The firming of these rates suggests that consumers
continue to bolster their financial positions by paying down debt
and not incurring excessive charges despite elevated unemployment
and economic weakness, which we consider a positive for auto,
credit card, and other types of consumer ABS credit."