Foreclosure Report Highlights: November 2016

The Foreclosure Rate in Non-Judicial States Is Now Back to Pre-Crisis Levels

Molly Boesel    |    Mortgage Performance

  • The November 2016 foreclosure inventory was 79.2 percent below the January 2011 peak.
  • The inventory of mortgages in serious delinquency fell 22.1 percent year over year in November 2016.
  • Wyoming was the only state to experience a year-over-year increase in its serious delinquency rate.

The national foreclosure inventory – the number of loans in the foreclosure process – fell 30 percent year over year in November 2016, according to the latest CoreLogic Foreclosure Report. The foreclosure inventory has fallen on a year-over-year basis every month since November 2011 (Figure 1), and in November 2016 it was 79.2 percent below the January 2011 peak.

The foreclosure rate – the share of all loans in the foreclosure process – fell to 0.8 percent in November 2016, down from 1.2 percent in November 2015. The foreclosure rate is back to 2007 levels, and is just slightly above the pre-housing-crisis average foreclosure rate of 0.6 percent between 2000 and 2006.

Judicial FCL States Cont to Have Higher FCL Rates

Figure 2 shows that, collectively, judicial foreclosure states[1] continued to have a much higher average foreclosure rate (1.4 percent) in November 2016 than non-judicial states (0.4 percent). The collective foreclosure rate in non-judicial states has returned to the pre-crisis rate of 0.4 percent, while the foreclosure rate in judicial states is 1.7 times the pre-crisis rate of 0.8 percent. As of November 2016, judicial states had 42 percent of the nation’s outstanding mortgages but 69 percent of all loans in foreclosure.

North Dakota was the only state to post a year-over-year increase in its foreclosure rate, but the increase was minimal, and the foreclosure rate in North Dakota remained low at 0.4 percent.

The serious delinquency rate – the share of loans 90 or more days overdue – was 2.5 percent in November 2016, down from 3.3 percent in November 2015. The November 2016 inventory of mortgages in serious delinquency fell 22.1 percent year over year and was 72.6 percent below its 2010 peak. The serious delinquency rate fell year over year in all states except Wyoming, where it rose by 0.1 percentage point.



1 In judicial foreclosure states, lenders must provide evidence of delinquency to the courts in order to move a borrower into foreclosure. In non-judicial foreclosure states, lenders can issue notices of default directly to the borrower without court intervention. This is an important distinction since judicial foreclosure states have longer foreclosure timelines, thus affecting foreclosure statistics.

© 2017 CoreLogic, Inc. All rights reserved


 


Loss of Anchors Crushes Small Town Malls
Most enclosed malls are anchored by large department stores, the loss of which can be devastating to a retail property.   Consider the example of the Fort Steuben Mall in Steubenville, Ohio, birthplace of Dean Martin.    The mall recently lost two of its four anchors, as Macy’s and Sears closed shop.  
The Fort Steuben Mall in this former steel town on the edge of the Ohio River is battling a double whammy of store closures that have thrust it into a fight for survival.
On one side of the mall is an empty space that housed a Sears department store and automotive center until the struggling retailer closed the location last June.  On the opposite side sits a Macy’s set to close in early spring, the retail chain said early this month, as part of 100 closures announced last summer. Together, the two anchor locations make up 37% of the property’s leasable space.
Fort Steuben Mall is being swept up in a wave of store closings that is buffeting landlords across the U.S. Specialty retailers such as the Limited and department stores such as Sears and Macy’s in recent months have announced plans to close hundreds of stores nationwide and slash jobs as online shopping takes a growing share of revenue.
DLC purchased the mall for $43 million in 2006, just before the recession. Since then, the mall has suffered from store closures including apparel retailer Steve & Barry’s, Waldenbooks and Toys “R” Us.
Kroll now values the mall at just $7.4 million, taking into account the coming loss of Macy’s. It projects creditors face a loss of $31.3 million.
Unfortunately, there are just not enough large retailers to fill large anchor spaces.   Once they are gone, it can cause a snowballing effect, as many tenant leases have “co-tenancy clauses,” which allow them to vacate the space if certain anchor tenants vacate.    Patrick Forkin of Baum Realty Group said, “Landlords are scrambling to figure out what to do with their soon-to-be vacant mall-anchor spaces.  Many landlords are getting creative to back-fill these spaces by considering experiential and destination-oriented users to the retail mix such as fitness clubs, outdoor outfitters, arcades, and storage.  Some of the active tenant in these areas include Planet Fitness, Cabela’s, Dave and Busters, and Life Storage.”
Clark Street Capital is a full-service bank advisory firm, specializing in loan sales, loan due diligence and valuation, and wholesale lending.   

 

The $9MM Badger C&I Relationship

Clark Street Capital's Bank Asset Network ("BAN") proudly presents: "The $9MM Badger C&I Relationship."  This exclusively-offered loan relationship is offered for sale by one institution ("Seller").   Highlights include:

  • Several Commercial and Industrial (C&I) loans originated to a single borrower with a total unpaid principal balance of $8,560,500
  • All loans are secured by first mortgages on owner-occupied commercial real estate
  • Portfolio has a weighted average coupon of 5.76%
  • Strong sponsorship with personal and corporate guarantees
  • All loans have prepayment penalties
  • Collateral is comprised of industrial buildings in Wisconsin with an LTV of 65%
  • Ability to acquire a depository relationship
  • All loans will trade for a premium to par and any bids below par will not be entertained 

Loan files are scanned and available in a secure deal room for review.    Based on the information presented, a buyer should be able to complete the vast majority of their due diligence remotely.   

Event

Date

Sale Announcement

Friday, January 27, 2017

Due Diligence Materials Available Online

Tuesday, January 31, 2017

Indicative Bid Date

Tuesday, February 14, 2017

Closing Date

Thursday, March 2, 2017

 

Please read the executive summary for more information on the portfolio.  You will be able to execute the confidentiality agreement electronically by clicking on the upper left hand corner of the link to the executive summary.