Sean O Toole Forclosure Radar 5 12 11

CA Foreclosure MarketUpdate & Opportunities

Sean O’Toole Founder/CEO ForeclosureRadar.com

May 12, 2011

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Market Update & Opportunities

• The Foreclosure Funnel• Have we turned the corner?• What to expect ahead• Opportunities• ForeclosureRadar

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• 8.6 Million Homes• 6.8 Million Mortgages• 2.2 Million Underwater• 650 Thousand Delinquent• 230 Thousand in Foreclosure• 113 Thousand Bank Owned• 20 Thousand Distressed SalesSources: ForeclosureRadar, CoreLogic, LPS, DataQuick

The CA Foreclosure Funnel

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• 8.6 Million Homes• 6.8 Million Mortgages• 2.2 Million Underwater• 650 Thousand Delinquent• 230 Thousand in Foreclosure• 113 Thousand Bank Owned• 20 Thousand Distressed SalesSources: ForeclosureRadar, CoreLogic, LPS, DataQuick

The CA Foreclosure Funnel

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1 Million / 20 Thousand= 50 Months

The CA Foreclosure Funnel

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Primarily Single Family Residential

Have we turned the corner?

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Delinquencies DroppingForeclosures Stable to Down

Have we turned the corner?

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Starts

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Have we turned the corner?

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?Consensus for Double Dip in 2011Headwinds Abound

- Pressure on Fannie/Freddie- FHA Premium Increases- Pressure on Jumbo Loan Limits- Pressure on Down Payments- Housing stimulus unlikely- Demand pulled forward last year with tax credits- Unemployment remains high- Economy continues to struggle

Delinquency Declines less than Exits

Have we turned the corner?

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Yes or No?

Foreclosure Intervention

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Everything Changed September 2008• Mark-to-Model • FDIC Crippled• Servicer & Investor Interests Not Aligned• Fed rescues home lending

Foreclosure Intervention

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Time to Foreclose Still Rising!

Average Days Delinquent 398Average Days to Foreclose 312----------------------------------------------Total -- Nearly 2 years!!!! 710and still rising

Over 2500 Countrywide loans with NOD from 2008 going to auction now

Where are we headed?

• While increases are possible we won’t see “wave” of REO’s or short sales - though we certainly should

• Foreclosure & shadow inventory “problem” will continue for years... we’ll muddle through as banks trickle inventory out

• Greatest weakness likely in higher priced homes and areas

• Primary risk to home values in CA is further tightening of lending standards NOT foreclosures

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Where are we headed?

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Interest Only

Pay Option

Rate Drops

Credit Crisis

Return to Traditional Lending

Payments Flat

Lending is the primary driver of home prices

Stated Income

Where are we headed?

• The borrower’s income, employment and credit determine risk of default

• But area incomes, economic outlook and direction of lending standards determine risk of loss

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Where are we headed?

• Leaders will have to choose:–Maintain Home Values–Let Markets Correct & Take Losses

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Opportunities - Trustee Sale Buyers

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Investors Spending ~$900M / monthAverage Hold Time 156 DaysRoughly $4.1 Billion Invested Now

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Opportunities - Trustee Sale Buyers

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Majority still goback to the bank

Opportunities - Trustee Sale Buyers

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• Finding Buyers:

Opportunities - Trustee Sale Buyers

• Majority of auction investors flip• Margins are getting thin for investors

–Idea: Help real estate brokers buy listings• Lobby to improve trustee sale process &

increase opportunity–Idea: Require early opening bids–Idea: Require smaller upfront payment

Arizona requires opening bids to be posted 1 day prior to auction, and buying only requires $10k depositResult: More investor purchases!

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Introduction to ForeclosureRadar®

• MLS like system for Foreclosures• Tracks every Foreclosure in California

–Public Record Notices• Notice of Default and Notice of Trustee Sale

–Daily Auction Results• Current status on each foreclosure• Includes new REO’s weeks before other services

• Deep search capabilities• Tracking and analysis built-in• Lead generation & Marketing for Realtors

How to Get Started

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FREE 3 Day Trial$49.95/Mo.Visit: www.ForeclosureRadar.comor email: support@foreclosureradar.com