Read this article today on how foreclosures have dropped for the seventh month in a row. The article has some really good information so I wanted to share it.
By Alejandro Lazo, Los Angeles Times
May 12, 2011
Increased scrutiny of how lenders foreclose on Americans has dragged the repossession process out to unprecedented lengths, driving down the pace at which banks are taking back homes.
Big banks are taking longer not only to push borrowers into foreclosure, but also to move homeowners through each stage of the process than in previous years, according to a report by Irvine-based Realty Trac
The extended timelines have meant a reprieve for troubled borrowers. But economists said the delays could hold back a national housing rebound if foreclosures remain a significant part of the market for years to come.
In April, U.S. foreclosure activity fell for the seventh month in a row on a year-over-year basis to the lowest point in more than three years, RealtyTrac said. The sharp April drop was the result of the foreclosure-processing slowdown and not an indication of a housing rebound lifting people out of default, experts said.
“The banks have had to slow down and get more lawyers involved because of all of the fuss over the robo-signing scandal,” said Christopher Thornberg, principal of Beacon Economics, referring to the revelations last year that banks foreclosed on properties using faulty paperwork.
In Florida, the average foreclosure took 619 days in the first quarter, up from 470 a year earlier and nearly four times the average of 169 during the same period in 2007.
Some economists are concerned that a slower foreclosure process will mean that the housing recovery will take longer to get going. Foreclosures tend to sell at a discount, and, when making up the bulk of sales in a market, give the perception that prices are falling. In addition, residential builders are struggling to compete with foreclosed homes. Home building has typically been an important boost to an economy exiting recession.
“Clearing this stuff out and getting this stuff over with is just essential, and so in the long run the faster these things can be resolved now, the better,” said Richard Green, director of USC’s Lusk Center for Real Estate. “That is the only point at which the market can resume normalcy.”
”If servicers foreclosed as quickly as they could, and they dumped all the properties on the market, you could get a downward spiral,” Eggert said. “As that happens, more and more borrowers go underwater and you could have a vicious cycle — just like the housing boom was fed by the perception that prices always go up, you could have a housing slump that is fed by the perception that prices always go down.”