Bank of America to Increase Foreclosure Rate by 600% in 2010

[babylonsister]

http://www.calculatedriskblog.com/2010/04/report-bofa-to-increase-foreclosures.html

Report: BofA to increase Foreclosures significantly in 2010

by CalculatedRisk on 4/07/2010 09:42:00 PM

Irvine Renter at the Irvine Housing Blog writes: Bank of America to Increase Foreclosure Rate by 600% in 2010

{Irvine Renter} attended a local Building Industry Association conference on Friday 26 March 2010. The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010.

After his surprising statement, two questioners from the audience asked questions to verify the numbers.

Bank of America is projecting a 600% increase in its already large number of monthly foreclosures.

This isn't unsubstantiated rumor; this comes straight from one of the most powerful men in Bank of America's OREO department (yes, that really is what they call it). It appears they have too many properties already.

CR Note: I tried to verify these numbers with BofA without success. Irvine Renter clarified this for me today. Apparently Gaitan said that Bank of America anticipates the peak of foreclosure activity will occur in December 2010 and will top out at 45,000 units that month. Apparently BofA believes foreclosure activity will trend down in 2011. According to Irvine Renter, Gaitan said BofA expects about 300,000 total foreclosures in 2010. That is a significant increase from the current 7,500 per month pace.

Once again, BofA's media department told me they'd get back to me - but no word so far - so there numbers have not been verified.

CR note: OREO stands for "Other Real Estate Owned"

[louis-t]

1. IF THEY WOULD LEARN TO DO SHORT SALES

Sorry for yelling, but I'm in the Real Estate business. If I hear BoA when asking who has the 1st mortgage on a short sale listing I'm going to show, I tell the buyers not to bother. You would be looking at a 6-month process. I'm at RE/MAX and BoA has been courting our company for a long time. I will NEVER use them again for anything, but our CEO met with them and suggested releasing all of their foreclosures onto the market instead of holding them back. 'Get it over with' was the thinking. Also, 1st time buyers are having to compete with investors over good deals and are losing, creating almost a false 'shortage' of affordable homes.

Oh, what I started to say was: they may not actually be foreclosing on more homes, just releasing more into the market. I've never heard a foreclosure dept. called OREO, usually it's just REO.

[anigbrowl]

3. Yeah, some banks are but not BoA apparently

You've probably seen this or similar news, but if not here are some interesting analysis of trends in the California market:
http://www.dqnews.com/Articles/2010/News/California/Bay-Area/RRBay100318.aspx

Looking for a starter home in San Francisco, I can't help noticing that the flow of new listings has slowed to a trickle over the last month or two, with agents calling me to tell me about price drops (and I'm looking at the low end of the market). Your suggestion they're sitting on a pile of property rather than offering it for sale certainly helps to make sense of this.

[louis-t]

4. If they sit on the property, they can leverage the full value

of the mortgage. If they sell at a loss, they have to show it as a loss. I think that's how it works. Not an accountant.

[anigbrowl]

5. I think you're correct. nt

[BootinUp]

2. some fuckin rough waters ahead...nt