Despite massive uncertainty about the validity of many aspects of the foreclosure process, foreclosure times actually decreased in three states last month. California, Arizona and Nevada all reported decreased foreclosure timelines in June 2011 despite uncertainty over MERS, bank processes and the general wisdom of adding to the shadow inventory in a fragile market[1]. According to ForeclosureRadar, even though the month-over-month foreclosure duration decreased in these states, year-over-year numbers still are in keeping with the prolonging trend. In Nevada, for example, the average number of days it took to foreclosure this June was 319 versus 239 in June 2010. Sean O’Toole, CEO of ForeclosureRadar, called the decrease “statistically interesting” but said that he does not “see it as signaling an end to lenders looking to avoid losses they can’t afford by continuing the extend and pretend policies of the past.”
Nationally, foreclosure filings have fallen 32 percent in the second quarter of 2011 after falling 29 percent in the first half of the year[2]. James Saccacio, CEO of RealtyTrac, recently projected that “One million foreclosure actions that should have taken place in 2011 will now happen in 2012 or perhaps even later.” He added that this will “only drag out the effect on the real estate market” and pointed to “an ominous shadow over the housing market” that he does not believe will dissipate until the foreclosure inventory is “whittled down to a manageable number.”
If banks cannot handle their own foreclosure volumes, doesn’t it make sense to let people stay in their homes? Let us know what you think about this catch-22 and its impact on the real estate market.
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[1] http://www.dsnews.com/articles/foreclosure-time-decreases-in-three-west-coast-states-june-2011-07-14
[2] http://www.theday.com/article/20110715/BIZ02/307159952/1018
Clearly it would be in everyone’s best interest to allow people to stay in the homes, in order to prevent vandalism and general deterioration of the homes and neighborhoods
Given the statistics here(which may still vary drastically depending on the county), the decreased timelines only mean that mortgage servicers will yet again use the foreclosure processes to deny homeowners due process in the court of law. Homeowners with legitimate claims including substantial evidence against MERS, mortgage servicers, and investment banks, are being forcibly evicted from their homes due to fact that they cannot afford proper representation, and the government’s sluggish approach in effecting legislature to protect(in most cases) the largest investment for a consumer. It is also somewhat unfair to the RE industry because lending laws are strict as ever, and the surplus of properties in the banks books has caused home values to plummet exponentially.
Leaving people in their homes only has value if lenders haven’t already soured the experience and caused people to neglect and/or intentionally damage the property. Homeowners who feel disenfranchised by their lenders tend to become angry and vengeful. The results tend to not be good.
An option lenders could consider is a moratorium on payments for short periods, say, three months at a time. The additional interest could be added onto the end of the loan. That would help borrowers keep their families fed and allow them to stay in their homes so they can be presentable at job interviews or have additional capital so they can start up an income producing entrepreneurial venture.