August Posts 33 Percent Spike in ForeclosuresPosted
by Carole VanSickle on Friday, September 16th 2011
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. 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”. 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?
Thank you for reading the Bryan Ellis Real Estate Letter!