On the basis of different area based foreclosure reports, many people concluded that the foreclosure crisis would soon come to a conclusion because most of the reports showed a steep decline in foreclosure numbers.
After the 49-state settlement with the five leading banks of the United States (Ally Financial, Bank of America, Citibank, JPMorgan Chase and Wells Fargo), strict guidelines were provided to these banks for foreclosing a property so no such scandal reappears in the real estate market in the future.
Since 2010, many foreclosure cases have been lingering in some stage of foreclosure. According to a professor at Kansas State University, Eric Higgins, the lenders suspended the foreclosure processing as they “were afraid that anything they did would be under a microscope.”
Owing to this suspension, delinquent borrowers got an advantage and continued living in their houses for a long time (ranging from several months to years) without paying any mortgage payment.
All across the nation, normally it takes about 370 days to foreclose a property. This average time is calculated from the first instance of non-payment of the monthly mortgage installment to final repossession of the property by the bank. Marketing Director of real estate data firm, RealtyTrac, Daren Blomquist said that five years earlier, banks used to take only about 185 days to foreclose a property.
In many areas like Florida and New York, delinquent borrowers have been staying in their foreclosed properties for nearly 861 and 1056 days respectively. In the words of the executive vice president of a housing investment firm, Carrington Holdings, Rick Sharga, “Perhaps a million foreclosures could have been pursued last year but weren’t. We’re going to see an increase in the speed of foreclosures and a higher number of foreclosure starts.”
But after this recent settlement, lenders have started processing all their backlog foreclosure cases. According to the latest information released by RealtyTrac, after March 2012 the rate of foreclosure filings has increased by 10% in 26 states of the country where the court is involved in foreclosure processing.
Foreclosures were most affected due to the robo-signing scandal in these regions. In Indiana, the rate of foreclosure processing has moved up by 45% in April 2012 in comparison to April 2011, whereas in Florida the rate has increased by 26%.
CEO Brandon Moore at RealtyTrac said, “The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short sale activity.”
Photo by Renjith Krishnan.
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