2012 Foreclosure Market Outlook for CMA

FORECLOSURE MARKET OUTLOOKAnd a Path Forward for Mortgage Professionals

©RealtyTrac Inc. 2012, Not for Distribution

What we’ll cover today

• A brief introduction to RealtyTrac

• Where we’ve been in the past five years• Foreclosure activity• Foreclosure sales

• Where we are going in the next two years• Scope of the shadow inventory• 2012 foreclosure market outlook

• A path forward for mortgage professionals

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A BRIEF INTRODUCTION TO REALTYTRAC


• RealtyTrac publishes the country’s largest database of foreclosure and bank-owned properties

– Data from over 2,200 counties, covering over 92% of U.S. housing units

• #1 Foreclosure site – 1.5 million foreclosure and bank-owned properties nationwide

– More coverage, more detailed information than any other national provider

• Unmatched property evaluation and transactional tools

– HomeScore, Equity & Loan Info, Property Analyzer, Online Offers, Foreclosure-MLS Match, and much more

WHAT REALTYTRAC IS

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• The RealtyTrac foreclosure database is NOT an “MLS for foreclosure records”

• Most of the properties in the RealtyTrac database are NOT on the MLS anywhere– Less than 20% of the homes in foreclosure are

listed– Less than 30% of REOs are listed– Many MLS organizations prohibit including any

REO or foreclosure information in the property listings

• What does this mean for subscribers?– Competitive advantage– No free lunch

WHAT REALTYTRAC IS NOT

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WHO RELIES ON REALTYTRAC DATA

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WHO RELIES ON REALTYTRAC DATA

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WHERE WE’VE BEEN IN THE PAST FIVE YEARS


PAST THE PEAK NATIONWIDE

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March 2010 was absolute peak with rolling average of 336,909

total foreclosure filings

March 2010 was absolute peak with rolling average of 336,909

total foreclosure filings


5 YEARS OF ELEVATED FORECLOSURES

• From January 2007 to December 2011 nationwide

• More than 8.2 million foreclosure starts• These can be NODs, foreclosure lawsuits or

scheduled foreclosure auctions, depending on the state

• More than 4 million completed foreclosures• These are REOs, or properties repossessed by

the lender through foreclosure

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PAST THE PEAK IN CALIFORNIA

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November 2009 was absolute peak with rolling average of

90,900 total foreclosure filings

November 2009 was absolute peak with rolling average of

90,900 total foreclosure filings


5 YEARS OF ELEVATED FORECLOSURES

• From January 2007 to December 2011 in California

• Nearly 1.9 million foreclosure starts• These are Notices of Default (NOD) in California• Represents 23 percent of national total

• More than 800,000 completed foreclosures• These are REOs, or properties repossessed by

the lender through foreclosure• Represents 20 percent of national total

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DISPOSING OF DISTRESS: SHORT SALES

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Trending higher after homebuyer tax credit hangover

Trending higher after homebuyer tax credit hangover


CALIFORNIA SHORT SALES

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More than 20 percent of all sales in CA compared to less than 10 percent

of all sales nationwide

More than 20 percent of all sales in CA compared to less than 10 percent

of all sales nationwide


SHORT SALE ACTIVITY SUMMARY

• From Q1 2007 to Q3 2011

• Nearly 1.7 million pre-foreclosure sales nationwide

• Average pre-foreclosure sales price nationwide down 26 percent over that time period ($191,119)

• Nearly 500,000 pre-foreclosure sales in California

• Average pre-foreclosure sales price in California down 43 percent over that time period ($268,321)

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DISPOSING OF DISTRESS: REO SALES

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REO sales hit lowest level since Q2 2008 in Q3 2011

REO sales hit lowest level since Q2 2008 in Q3 2011


CALIFORNIA REO SALES

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22 percent of all sales in CA compared to 12 percent of all sales

nationwide

22 percent of all sales in CA compared to 12 percent of all sales

nationwide


REO SALE ACTIVITY SUMMARY

• From Q1 2007 to Q3 2011

• Nearly 2.5 million REO sales nationwide

• Average REO sales price nationwide up 7 percent over that time period, but down 26 percent from peak ($146,437)

• Nearly 650,000 REO sales in California

• Average REO sales price in California down 53 percent over that time period ($208,039)

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HARDEST HIT MARKETS

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MSA Name 2011 Prop. w / FC Filings %HousingUnits Foreclosure Rate Rank

Las Vegas-Paradise, NV Total 60,488 7.38 1

Stockton, CA Total 12,420 5.43 2

Modesto, CA Total 9,269 5.29 3

Vallejo-Fairf ield, CA Total 7,848 5.20 4

Riverside-San Bernardino-Ontario, CA Total 75,559 5.16 5

Phoenix-Mesa-Scottsdale, AZ Total 88,682 5.10 6

Merced, CA Total 3,700 4.40 7

Reno-Sparks, NV Total 7,986 4.37 8

Bakersfield, CA Total 11,828 4.31 9

Sacramento--Arden-Arcade--Roseville, CA Total 35,772 4.17 10

Fresno, CA Total 11,859 3.82 11

Atlanta-Sandy Springs-Marietta, GA Total 80,045 3.69 12

Visalia-Porterville, CA Total 5,097 3.67 13

Prescott, AZ Total 3,743 3.50 14

Cape Coral-Fort Myers, FL Total 12,014 3.29 15

Oxnard-Thousand Oaks-Ventura, CA Total 8,957 3.27 16

Greeley, CO Total 2,809 2.97 17

Detroit-Warren-Livonia, MI Total 55,748 2.94 18

Boise City-Nampa, ID Total 6,930 2.85 19

Salt Lake City, UT Total 11,279 2.81 20

• 10 out of 2011 top 20 metro foreclosure rates in California• But all 10 saw decreasing foreclosure activity from 2010


HARDEST HIT MARKETS

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• 16 of top 20 metro areas for percent of foreclosure sales in CAAll FC Sales Comparison

MSA Name # of Sales % of All Sales Avg Sales Price Avg Discount %

Modesto, CA 1,688 65.63 $129,994 18.29

Stockton, CA 2,264 64.08 $157,355 11.90

Las Vegas-Paradise, NV 12,243 60.50 $113,892 19.57

Vallejo-Fairfield, CA 1,273 60.39 $179,314 24.35

Merced, CA 669 58.33 $112,929 11.39

Salinas, CA 692 52.62 $253,641 41.54

Riverside-San Bernardino-Ontario, CA 11,950 51.87 $173,461 18.88

Fresno, CA 1,727 51.25 $130,905 27.90

Bakersfield, CA 2,111 50.60 $118,316 15.37

Sacramento--Arden-Arcade--Roseville, CA 6,357 50.02 $179,437 28.90

Phoenix-Mesa-Scottsdale, AZ 18,023 46.35 $122,175 26.31

Visalia-Porterville, CA 740 45.01 $117,568 28.43

Reno-Sparks, NV 1,273 43.84 $140,509 31.35

Oxnard-Thousand Oaks-Ventura, CA 1,213 42.71 $340,335 25.60

Santa Barbara-Santa Maria-Goleta, CA 501 41.61 $324,352 47.19

Tucson, AZ 2,011 41.35 $118,871 33.43

San Diego-Carlsbad-San Marcos, CA 4,669 40.10 $296,158 32.69

Santa Rosa-Petaluma, CA 756 39.79 $277,470 28.53

Los Angeles-Long Beach-Santa Ana, CA 14,112 38.17 $318,433 38.32

Chico, CA 313 37.09 $142,107 25.09

Current: Jul 01, 2011 - Sep 30, 2011

WHERE WE’RE GOING IN NEXT TWO YEARS


CHASING THE SHADOW INVENTORY

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1.4 million U.S. properties in some stage of foreclosure



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3.6 million U.S. delinquent mortgages

SOURCE: Mortgage Bankers Association Q3 2011 National Delinquency Survey



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12.5 million U.S. underwater mortgages



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281,000 California properties in some stage of foreclosure



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443,000 California delinquent mortgages

SOURCE: Mortgage Bankers Association Q3 2011 National Delinquency Survey



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2.1 million California underwater mortgages



• Nationwide shadow distressed inventory of 5 million

• Plus 12.5 million underwater loans at risk• 16-month supply of REOs (43K monthly REO

sales)

• California shadow distressed inventory of 724,000

• Plus 2.1 million underwater loans at risk• 11-month supply of REOs (10,500 monthly REO

sales)

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DELAYED FORECLOSURES COMING

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24 Percent Jump in August

24 Percent Jump in August


DELAYED FORECLOSURES COMING

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NODs hit 15-month high in October

NODs hit 15-month high in October


TIMELINES START TO TURN A CORNER

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Average time to foreclose decreased in California in

fourth quarter after 12 straight quarters where it increased

Average time to foreclose decreased in California in

fourth quarter after 12 straight quarters where it increased


DELAYED DELINQUENCIES FORECLOSED

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2012 FORECLOSURE OUTLOOK

• Foreclosure activity in 2012 will increase from artificially low 2011 levels caused by foreclosure processing delays.

• Foreclosure activity in 2012 will not return to the peak of 2009 (depending on market), and foreclosure activity will resume its downward trend in 2013.

• California is leading this trend among the states, so we expect to see the increase in available foreclosures here first. And also the return to the downward trend first.

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THANK YOU!

Economy & Finance

2012 Foreclosure Market Outlook for CMA