In my last blog, I mentioned that there were many properties on hold for foreclosure while waiting for the $25 billion banking settlement to be reached.
Now that the settlement finally has been reached, many of these foreclosures that were stuck in the "Robo-signing" paperwork scandal ("shadow inventory") will come into the market stream. Most likely they will be at lower prices, too, and could drive all home prices even lower.
But how much lower and how fast prices will fall will can only be determined by how fast the lenders will proceed with these foreclosures. CoreLogic estimates the current shadow inventory is about half the current visible inventory: Read More
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Foreclosure starts surged 28 percent in January (from December), according to a new report from Lender Processing Services (LPS). In January alone, more than 230,000 loans began the actual foreclosure process.
RealtyTrac’s: Foreclosure Market Report
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The Five states with the highest foreclosure rates are Florida (11.8 percent), New Jersey (6.4 percent), Illinois (5.3 percent), Nevada (5.0 percent), and New York (4.7 percent).
The Five states with the lowest foreclosure rates are Wyoming (0.7 percent), Alaska (0.8 percent), North Dakota (0.8 percent), Nebraska (1.1 percent), and Texas (1.3 percent).
“Home prices across the nation saw light levels of depreciation in February, consistent with the trend we have seen over the last several months,” said Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “However, the Northeast, Midwest, and West improved performance against last month’s quarterly declines in light of increases in REO saturation, which is unusual and encouraging.”
"We will see an increase in short sales, because lenders and loan servicers will get the same credit for doing a short sale, as if they did a loan modification or principal reduction," said Rick Sharga, Executive Vice President of Carrington Mortgage Holdings LLC.
There are improvements in the job market and consumer confidence is rising. Also, investors, often with cash, are picking up speed buying up many of the lower priced homes, even in lots. These are all good things!
The housing market is healing, a Capital Economics report stated, but the road to recovery will be a long and gradual one. The research firm expects to see home sales and homebuilding continue with increases, while house prices are expected to finally stop falling later this year.
While data through the end of this past January shows significant movement in both foreclosure starts and sales, it has some market watchers saying the lull in foreclosure activity seen over the past year-and-a-half may very well be coming to an end. However, the banks do not want to over-saturate, but to drag it out would only prolong the problem. Please see the attached chart/picture on how it all may work.
Across the nation, many struggling homeowners were able to get a reduction in their mortgages, modify their loans, or opted to do a shortsale, which is not as bad as a foreclosure is (on your credit report).
In our immediate area, currently I don't see any foreclosures listed, (although, sometimes banks hire their own private firms), but I am aware of some shortsales that are. I see many non-distressed homes being listed, and several homes going under contract, too. The good news is we have been picking up steam, and the activity has been long overdue (and the weather has certainly been helpful too). Could this be the end of our lull?
Only time will tell!
Next blog: The Mortgage Debt Relief Act of 2007
