Foreclosure Filings Dropped in April
Foreclosure filings dropped 34% from what it was a year back. This was the 7th month in a row that foreclosures had plunged. Around 69,532 houses were repossessed in April. This was a 32% drop from the peak of September.
This had happened immediately prior to the robo-signing scandal. It was alleged that banks were signing documents without verifying them properly. The scandal that rocked the nation compelled banks to refrain from continuing with foreclosure operations; hence, foreclosures dropped across the nation.
The good news will not continue for a long time. RealtyTrac president, Rick Sharga said that the number of foreclosures dropped to 220,000. That included bank repossessions, auctions and even default notices. At least 3.7 million homeowners are not able to make payments. They are at least three months late on payments. Under normal circumstances, these people would have already been in foreclosure. But for two reasons, foreclosures have not happened.
The regulatory issue is one deciding factor. Banks want to be sure that they are not doing anything wrong. The second factor is that many markets are saturated with repossessions. Sharga said, “Banks can’t move inventory fast enough, at prices high enough, that they’re excited about foreclosing on any more homes”.
There are also reasons for believing that conditions are set to improve. First is that employment numbers are gradually picking up. Hence, some borrowers are now being able to pay their bills. Banks are doing their bit to keep homeowners from losing their homes.
Banks were able to complete 77,000 modifications on their own. They did not need government help. This was revealed by Hope Now, a body of counselors, investors and mortgage servicers. When compared to February, the percentage is at least 26% more. Hope Now’s head Faith Schwartz, said loan modifications have become more affordable. Now the market should be in a much better position.
However, residential home prices are going down. That is a bad news because many homes now have negative equity. A home is said to be “under water” when an owner pays more for it than it is worth. Many homeowners prefer to walk away from such units.
Vacant properties are now an eyesore in many US cities. It may be pointed out underwater homes have now reached 28.4%. The figure is only set to become worse if prices drop further. Observers say that the market will not stabilize before 2014.
