The Benn Pacific Blog

Sort by Month: October 2010

Friday, October 15, 2010

Foreclosure Freeze

From http://www.msnbc.com:

Foreclosures hit post-bust peak in third quarter
288K homes affected, but many could now be challenged in court

From msnbc.com news services on 10-14-10

Lenders seized more US homes this summer than in any 3-month stretch since the housing market began to bust in 2006. But many of the foreclosures may be challenged in court later because of allegations that banks evicted people without reading the documents. A total of 288,345 properties were lost to foreclosure in the July-September quarter, according to data released Thursday by RealtyTrac, a foreclosure listing service. That’s up from nearly 270,000 in Q2, the previous high point in the firm’s records dating back to 2005.
Banks have seized more than 816,000 homes through the first 9 months of the year and had been on pace to seize 1.2 million by the end of 2010. But fewer are expected now that several major lenders have suspended foreclosures and sales of repossessed homes until they can sort out the foreclosure-documents mess. On Wednesday, officials in 50 states and the District of Columbia launched a joint investigation into the matter.

Rick Sharga, a senior vice president at RealtyTrac, noted that legal challenges to foreclosures are likely. But he doubts many will be successful in overturning foreclosures. He said he expects foreclosures to resume and predicts about 1 million homes will be taken back this year. “The bottom line is not that those properties won’t be repossessed,” Sharga said. “They simply won’t be repossessed as quickly. We’re simply delaying the inevitable.” Experts say if lenders resume foreclosures in a couple of months or so, the delay will amount to a temporary lull followed by a spike in home repossessions early next year.

But if the crisis drags on for months and more lenders stop seizing homes, the foreclosure delays could last well into next year. That could have a severe effect on home sales and prices. A freeze in foreclosure sales between now and December by a majority of lenders could amount to removing 30% of all home sales for that period, Sharga suggests. “You would virtually guarantee that tens of thousands of properties would miss going to market in time for the spring, which is the peak buying season for real estate,” Sharga said. Nearly 600,000 bank-owned homes are not yet on the market, according to RealtyTrac.

The states most affected by the foreclosure freeze accounted for 40% of all foreclosure activity in Q3 and 36% of homes taken back by lenders, the firm estimates. Sales of homes by lenders made up 18% of all US home sales in September, the firm said. Other experts say delays from the foreclosure documents problem won’t end up having a huge impact on home sales or housing values. Foreclosed homes that would have been sold by lenders now will be sold 7 or 8 months from now, and prices will start going declining about 3 to 4% nationally, on average, when those sales take place, said Andres Carbacho-Burgos, an economist at Moody’s. That’s good news if you’re a homeowner looking to sell in the near term, because there won’t be as much competition from deeply discounted foreclosed properties, Carbacho-Burgos said. “But if you were looking to sell further down the line, that’s not so good news,” he said. Economic woes, such as unemployment or reduced income, continue to be the main catalysts for foreclosures this year.

Yesterday, we reported on the 49 state probe.  Thankfully, Alabama has jumped on board and now all 50 states and DC have united to launch a combined investigation into the still growing foreclosure scandal. So far, JPMorgan Chase, Ally (GMAC Mortgage), Bank of America and Wells Fargo are the major players implicated in the investigation

 

 

Posted by Trevor Benn on October 15, 2010 at 10:32 AM
Real Estate News • (1) CommentsPermalink
Page 1 of 1

Buying a Home

For many, a real estate purchase may be the biggest purchase of their lives. As a result, the buying process can seem daunting and difficult…

Read our Steps to Buying

Selling a Home

Selling can sometimes seem like an overwhelming process, but with our help… it doesn’t have to be. With our expertise and strategies…

Read our Steps to Selling