Nevada City Virtual Tour

Monday, August 25, 2014

California Notice of Default and Foreclosure trends

Just over 17,500 notices of default (NODs) were recorded in California in the second quarter (Q2) of 2014, down 9% from the prior quarter and down 32% from the same time last year.
Roughly 7,400 trustee’s deeds were recorded in Q2 2014, signifying foreclosures sales. This is down by 25% from one year ago when 9,800 trustee’s deeds were recorded.
However, the percentage of NODs resulting in foreclosure rose to 41%. This is up from 26% one year earlier.
Among California’s largest counties, the greatest one-year drops in foreclosure sales took place in San Francisco (-58%), Riverside (-30%) and Orange (-36%) counties. 
Looking forward, the number of trustee’s deeds has likely bottomed in mid- 2014, due to the flattening trend in NODs. Expect a slight increase in NODs, followed by a parallel increase in foreclosure sales going into 2015.
Chart 1
Chart update 08/15/14
Q2 2014Q1 2014Q2 2013
NODs recorded
Trustee’s deeds (foreclosures)
Chart 2
Chart update 08/15/14
Q2 2014Q1 2014Q2 2013
% NODs going to foreclosure
Foreclosures are an indicator of continued market distress. These charts track the number of NODs, which predict foreclosure sales occurring roughly nine months forward
The foreclosure process begins
Recording an NOD is the lender’s first step in the foreclosure process, following a minimum 90-day delinquency. The recorded trustee’s deed is the final step when the delinquency has not been paid current or the loan paid off.
If the lender acquires title after the foreclosure sale, the property is relisted as real estate owned property (REO). If a third-party purchaser acquires the property at the foreclosure sale, no special notation takes place when the property is relisted.
NODs are a good indicator of the financial condition of state, regional or local housing markets. As such, recent data on NODs and foreclosure sales forecasts the future volume of foreclosures and REO inventory.
In a normal housing market, the entire foreclosure process takes place over four to five months following a recorded NOD. In the current market, it takes an average ofnine months to complete the foreclosure process from NOD to trustee’s foreclosure sale.Why so long? Negotiations for loan modifications and short sales, and lender backlogs are to blame. Still, good news going forward: the foreclosure process is trending shorter year over year.
Today’s NODs indicate the amount of foreclosure activity nine months forward.
The quantity of NODs has generally declined since 2009. The percentage of NODs that end in foreclosure has also decreased. This decrease is due primarily to increased short sale and loan modification activity.
Time keeps on ticking
Short sales remain somewhat common in 2014, totaling 9% of all California resale activity in Q1 2014.
The lender that does not foreclose promptly when faced with a 90-day delinquency will lose money each day the trustee’s sale is delayed. In turn, that delay will lengthen the real estate market’s recovery period.
Another aspect to be observed: foreclosures tend to tick upward toward the end of a recovery. Underwater homeowners eventually turn to strategic default if they see no debt relief from price increases.
NODs become REOs
Only when NODs become REOs or flips do they impact prices. Large amounts of REOs destabilize home sales volume and pricing, dragging prices down. The abnormality in 2013 was due to the high speculator presence. Speculators have caused prices to inflate drastically, in turn helping REO resales decline to about 7% of all home sales. Don’t expect REO resales to remain this low in 2014, as speculators have begun to exit the market, taking high prices with them.
Once REOs decline and remain at a normal 7% of sales volume, stability will return to real estate pricing. However, it all starts with fewer NODs and foreclosure sales. California’s NOD and foreclosure levels are slowly decreasing. NODs will likely return to normal levels once the Fed raises interest rates around 2015.

Tuesday, August 12, 2014

Will fracking decrease California property values?

I’m not a geologist and hence not qualified to comment on the pros and cons of the fracking process, so I won’t!

But data is beginning to emerge how fracking  affects property values.
And if history is any indicator it’s just a matter of time before CAR/NAR starts requiring disclosures.
And if you think it can’t happen here in California, just click here to view the vast (currently known) Monterey Shale Formation Geological Map!
Housing Wire Columnist Ben Lane exposed the risks to property values by the process known as “fracking”.
Natural gas drilling wells are becoming a more frequent sight throughout the country.
In many cases, shale filled with natural gas is mined underneath a populated neighborhood.

But the proliferation of the wells and the increase in natural gas drilling in residential areas presents a unique set of problems for homeowners and mortgage bankers alike.

In a webinar titled, “Oil and Gas Exploration for Mortgage Bankers,” attorneys from Ballard Spahr discussed the shale boom and what impact it will have on the mortgage market going forward. 

Here are the highlights:

1. Fracking causes a decrease in property values.

Because of the unknown and potentially dangerous elements involved in fracking, property values for homes with gas wells drop by as much as 15%.

There have been accusations of contaminated water, polluted air, and even earthquakes being cause by fracking.

Studies are still being done on all of these, but with the amount of unknown consequences piling up, property values are going down.

2. The shale boom is not close to being over.

“This is not a short-term boom,” said Harry Weiss, of Ballard Spahr’s Environment and Natural Resources Group.

3. Shale production is going to keep climbing as additional states begin to allow drilling, shale production will continue to climb exponentially.

4) 3-5% of wells may have some environmental incident.

“The chances of accidents occurring in these areas have increased,” Weiss said. Weiss cited the potential for polluted ground water, but said that he had not seen one case where hydraulic fracturing has been connected to polluted ground water.

“ As lenders consider the risks about lending on these properties, there are a lot of different possible outcomes other than a disaster,” he said.

5. It’s important to do due diligence to determine who owns the subsurface estate.

In some cases, the property owner may not own the oil and gas right.

The surface and subsurface rights may have been separated over the course of the property’s history. Title research is key in these instances.

6. Oil and gas drilling negatively impact the secondary market.

“The secondary market hasn’t caught up with the risk of these loans,” said Daniel McKenna, with Ballard Spahr’s Mortgage Banking Group.

Editor’s Note:  Fannie, Freddie, the FHA and VA prohibit gas leases on the land secured by their loans.

Monday, August 4, 2014

Nevada City and Grass Valley Events

“As You Like It” Plays thru Aug 10As You Like It Jeffrey Mason, Director Synthetic Unlimited presents a modern all-ages interpretation of William Shakespeare’s As You Like It, a delicious comedy about politics and courtship, from July 24th- August 10th at the Synthetic Unlimited Opera House, 120 Joerschke Drive, Grass Valley. Jeffrey Mason has adapted and directs a vibrant version of this […]
MarchFourth Marching Band Aug 8KNOW & GO WHAT: MarchFourth Marching Band WHEN: Friday, August 8, 2014, Doors open at 7:30 p.m., Festivities 8pm, the show begins at 9:00 p.m. WHERE: Miners Foundry Cultural Center, 325 Spring Street, Nevada City TICKETS: Tickets are $22.00 for Advance General Admission, $26.00 General Admission at the Door, and $32.00 for Limited Reserve. Limited […]
“E.T.” in the Park Aug 15KNOW AND GO: What: Nevada City Film Festival presents “E.T. the Extra-Terrestrial” in the Park When: August 15, 2014 8pm-10pm Where: Pioneer Park in Nevada City Tickets: $7 GA, $5 kids under 12, tickets available at Nevada City Chamber of Commerce, BriarPatch Co-Op and online at For more info: Summer has a way […]
North Star House Fundraiser Aug 16First Annual Fundraiser for The North Star Historic Conservancy! “House Party of the Year”with Lorraine Gervais & the Love Bombs August 16, 2014 • 7:30 – 10pm Gates open at 6:30 – Lawn Seating Tickets: $35 Early Bird Price through July 15th/$40 After July 15th Tickets available online at and in person at Nevada […]
NCCB Pioneer Park Concert Aug 24Just a Kid at Heart Sunday, August 24 • 5-7pm Pioneer Park, Nevada City The last picnic concert of the year! The Pioneer Park concert on Sunday August 24 “Just a Kid at Heart” will feature music that will remind you that we are all just kids in many sizes. Featured will be the two […]
Wine Spectator Magazine Recognizes Friar Tuck’sFriar Tuck’s Restaurant & Bar of Nevada City has received a 2014 Award of Excellence from Wine Spectator magazine, one of only four such awards in the Northern Sierra region. The selection is announced in the August issue of Wine Spectator as part of its 33rd annual international awards program. The magazine received submissions from […]
Farm To Table at NC Uncorked Sept 6Nevada City Uncorked Farm To Table Theme Takes Shape This year Nevada City Uncorked is focusing on a farm-to-table theme featuring the agricultural bounty of the Northern Sierra Foothills. Uncorked is a walk-about-town event on Saturday, September 6, from 1:00 to 4:00 p.m. that includes 20 different venues throughout downtown Nevada City. Each location, whether […]
Nevada City Film Festival Sept 4-7KNOW & GO WHO: 14th Annual Nevada City Film Festival WHEN: Thursday – Sunday, September 4-7, 2014 WHERE: Miners Foundry Cultural Center, 325 Spring Street, Nevada City, CA and Haven Underground, 226 Broad Street, Nevada City, CA TICKETS: Tickets $7/$9 for individual screenings, $89/$99 Festival Passes. Tickets go on sale August 1 for members, August […]

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