A little update on foreclosures today:
According to data provider RealtyTrac via a Housingwire.com article, foreclosures were down in October. 332,172 properties received a notice of default, auction, or repossession. This is the 20th consecutive month of more than 300,000 notices. Although repossessions fell 9 percent in October, this is mostly because major lenders suspended their foreclosures as a result of the ongoing foreclosure/robo-signing disaster. So the decline in foreclosures (which are still astronomically high) is not really a cause for celebration. RealtyTrac CEO James Saccacio said:
“The number probably would have been higher except for the fallout from the recent “robo-signing” controversy – which is the most likely reason for the 9 percent monthly drop in REOs we saw from September to October and which may result in further decreases in November”.
Many major lenders and servicers have resumed foreclosure activities, however there is an increasing push-back from borrowers, litigators, judges, and lawmakers against these foreclosure cases. Earlier this week, a story emerged about increased scrutiny being placed on foreclosure paperwork by the New York State Judiciary. It remains to be seen what, if any, effect the foreclosure fiasco will have on the foreclosure rate moving forward.
If you take the (unpredictable) outcome of the foreclosure fraud problem out of the equation, conditions are ripe for an increase in the foreclosure rate. Home prices are currently declining, and the number of borrowers that are underwater on their mortgages is increasing. Unemployment and underemployment also remain sky-high. As more people exhaust their savings and have increasingly negative home equity, we will likely see foreclosures continue at a rapid pace. Christopher Whalen of Institutional Risk Analytics recently said that we have only processed about 1/4 of the foreclosures that will eventually occur. I guess the takeaway here is that while foreclosures dipped last month, the dip is likely temporary, barring some sort of massive shift in the housing market.
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