It looks like the unofficial moratorium on foreclosure may be over. 33 percent more U.S. homes received an initial default notice in August over July – the biggest monthly gain in four years[1]. While an initial notice does not guarantee a foreclosure, the spike does seem to indicate that lenders are done waiting for resolution on the robo-signer crisis and other foreclosure fraud issues and are preparing to get back to the business of recouping lending losses. “It’s still possible this is a blip,” said RealtyTrac senior vice president Rick Sharga, “but I think it’s much more likely we’re seeing the beginning of a trend here.”
Although it’s definitely not good news for delinquent homeowners who may have been hoping that a stalled foreclosure might indicate that the banks were going to let them stay or be more likely to work out a loan mod, the spike in default notices is probably good news for the housing market itself. Foreclosures “weigh down home values and create uncertainty among would-be homebuyers,” says Josh Levin, a Citi analyst. He hopes that the return to “normal” operations will help ease the “bloated foreclosure pipeline [that] now presents the greatest obstacle to a housing recovery”[2]. Auctions are also occurring with increasing frequency as lenders bite the bullet and sell off houses to recoup what they can on foreclosed homes.
Do you think that this dramatic rise in foreclosures is a good thing for the market recovery?
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[1] http://realtormag.realtor.org/daily-news/2011/09/15/defaults-soar-33-biggest-monthly-gain-in-4-years
[2] http://www.startribune.com/business/129855443.html
I agree with the the above comment. It is logical and intelligent…but,
it has very little chance of being implemented because 1) there is very little intelligence or logical thought in Washington, 2) the banks would never go for it, and 3) all the politicians are in the pockets of the banking lobby.
What we must realize is this entire fiasco was by design. It is a re-shuffling of capitalism with the money moving upward to fewer banks and the rich. It is no accident that 2.4 million middle-class people have joined the ranks of those in poverty. And, there is going to be more of the same in the coming years. Ever since the government started keeping statistics, there have always been more people falling into poverty than the year before. Does anyone think this trend is going to be reversed especially when there is no one interested in doing something about it?
These moves by the banks are not going to do anything for the housing market.
Who is going to buy this glut of foreclosures if the banks still aren’t giving loans? The banks are only looking at short-term solutions. They are not looking for fairness. Their only goal is to return to business as usual which is soaking up money from wherever they can find it.
As a people we are powerless, so we look to the government for help. What a joke! Many years ago the decision was made to re-engineer our social and economic structure to conform to growing globalism. It was known then there would be many economic caualties along the way. This was not a problem as the same principles of war were applied with the acceptance of collateral damage — the people.
Maybe at some time in the future, people will wake up and not fall prey to all the propaganda or listen to the so-called experts as to what is going on. Maybe they will one day see all this talk of “freedom” was just a cover for capitalism to make serfs of most of us. The ecomomic system was designed by the wealthy to make them even richer, to easily control the people, and be able to corrupt and tinker with capitalism to their advantage.
My plea to all those who dwell in serfdom and who live on the king’s land, put down your i-phones, get your butts of of Facebook, forget about Kim Kardasian and other such diversions, and pick up your pitchforks and storm the king’s castle.
What is really causing the decline in values?
The banks! Every time they turn down a loan modifiaction and force a distressed property to sale they lower the area values making the chance of another distressed situation go up.
They are also limiting the pool of buyers by tightening lending criteria too much.
This is a one two punch to the housing market that is devastating.
Think about before the robosigning scandal did the banks lack of working with people and taking things to foreclosure as quickly as possible stabalize the market? NO! It put it in free fall! Sure we might hit the bottom sooner, but how much further down do we want the bottom to be? Jumping out of an airplane without a parachute helps you reach the bottom quicker too but it sure isn’t a pretty sight when you get there.
Some very good points across the board!! Most of the lenders rushing to foreclose are infact just the servicers for fannie and freddie.So while one side of the goverment rolls out the plan to stabilize not only the housing markets but the portfolio at both entities. The big three rush to foreclose. Lets face it a deferral in rates(earned income for 5 years) on the complete overstated value is by far a better alternative than selling that asset( note) for .20 on the dollar.
The modifications needed to be handed down to the banks from freddie and fannie if the true intention WAS to modify and WAS to help
Most economists think we should foreclose everyone as fast as possible so as to take our medicine and be done with it ASAP. I think it’s time to bail out Main Street, that after bailing out Wall Street there can be no legitimate complaint about “moral hazard.” I like what the New Bottom Line is doing but think that (1) it doesn’t go far enough and (2) it goes too far. I would suggest that a law be passed requiring all banks and servicers modify all underwater loans ASAP so as to preserve the borrower’s equity at the time the loan was originated, plus any equity that the borrower should have earned since that time, but that these loans be modified annually (or at the same frequency as county assessments are made) to reflect new assessments, so that any rebound in home prices benefits the lender as well as the borrower. This would be called the “constant-equity, adjustable principal” loan, and could work towards reducing future real estate bubbles–you are less likely to invest in real estate if you know that 80% of every quick buck will go to your bank.
“…I would suggest that a law be passed requiring all banks and servicers modify all underwater loans ASAP so as to preserve the borrower’s equity at the time the loan was originated” If I could have my loan modified, I’d have more money per month/week to pay down my credit card debt. -This is a good idea. Modify ALL underwater loans. Is my loan doable? Barely. Went from two incomes down to one. Was making $500 a week in ’08 now down to $45.93. -Yes, I only work six hours a week @ $8.75/hour. A loan mod would really help me and my gf.