Foreclosure Lists Getting More Crowded

Posted in Foreclosed Properties, Foreclosure, Foreclosure Listings, Foreclosures, Mortgage Rates, July 16th, 2007 |

Of all the property listings foreclosures comprise of 10%-15%. More and more bank-owned properties are crowding into the housing market. Lenders are crying themselves hoarse in praise of foreclosure deals but it is better to test the waters before wading in. The risk factor is present.

With a record number of units going up for sale, lenders are vying and competing with each other to dispose of the properties, very often through the services of multiple listing. The falling prices have affected borrowers badly with the loss in equity. At a time when lending standards had been relaxed, mortgage rates were low and house prices were high, many had opted for mortgaged homes. But all that is in the past. The future is grim.

Numbers are confusing and contradictory. It seems that in Baltimore 10% to 15% are on the active foreclosure lists. According to Metropolitan Regional Information Systems INC in June 20,000 houses in Baltimore and five surrounding counties were on the market shelves up for sale. The number of units owned by lenders is expected to grow and swell as more people collapse under the weight of increase in mortgage rates.

The Mortgage Bankers Association reports that in Maryland the numbers in comparison to 2006 rose by 30% in the first quarter. The numbers of those lagging behind the 60 days limit rose by 20%. Apparently Maryland seems to be better off than the other regions but nevertheless about 5,700 homeowners are facing dispossession. The rising foreclosure curve might aggravate matters and prolong the depression.

The lenders cannot sit for long on the properties they have taken back, is the opinion of Celia Chen of Moody’s Economy.com. They will have to sell it. This will obviously tell on the market. The property appreciation will remain weak. Some experts opine that the worst is not yet over. Foreclosures in suburban areas are soaring too. Now it is a buyer’s paradise. More and more banks are buying back foreclosed properties as other bids fall far shorter than the target. The number of owners with little or practically no equity has increased.

More expensive housing units are going into foreclosure. It seems third parties are not buying them. It is the lenders who are stuck with it. Generally the more recent loans have far less equity. This will mean that banks will buy-in more and more properties.

Via