Foreclosure Mess Continues
In 2010 we saw a growing number for foreclosures across the US. This tended to cause bottlenecks in the offices of the banks handling the foreclosures. It also slowed down short sales because of the paperwork load.
And then we had the robo-signing scandal where it appeared that many institutions were not following protocol during the foreclosure process and the possible implications of this. I wrote a little about it here….
Because of this the banks started to slow their foreclosure procedures throughout the process. In many cases people were not getting a notice of foreclosure until they are a year or more behind on their payments. That means that they lived in the house free of charge for that year. If they took care of the house, made the utility payments it seems that the banks were holding off on foreclosing because of the backlog of inventory they already had.
Because of this there have been predictions of a foreclosure dump in 2011. That is, people are thinking that the banks will begin to speed up the sales of their inventory. Here is one such prediction.
This may indeed happen because it is certainly true that the lenders are holding a lot of inventory, and forestalling getting more inventory by letting people stay in their homes longer without making payments, (this is part of a shadow inventory that the banks don’t have to declare on their balance sheets). But there are other machinations in the works as well.
Ten days ago, Wells Fargo and US Bankcorp lost a major case by a unanimous decision in the Massachusetts Supreme Court. This decision determined that the lenders failed to show that they were the proper holders of the mortgage at the time of the foreclosure. The way that the mortgages were bundled together and then sold piecemeal to investors worldwide made it hard to back the process up by unbundling the specific mortgage tied to the specific house. It’s certainly not impossible and can be done but takes more attention to detail than the lenders were giving it.
This is only a state supreme court but it certainly will be viewed as precedent in all other similar cases. Here is a quote and link to the article, That issue, including the use of “robo-signers” who approved foreclosure documents without reviewing them, last year prompted an uproar that led lenders such as Bank of America Corp, JPMorgan Chase & Co and Ally Financial Inc to temporarily stop seizing homes.
“A ruling like this will slow down the foreclosure process” for lenders, said Marty Mosby, an analyst at Guggenheim Securities in Memphis, Tennessee. “They’re going to have to be really precise and get everything in order. It doesn’t leave a lot of wiggle room.”
So…we may have a foreclosure dump this year, OR, we may not have one. It is still an unpredictable situation.
The foreclosure situation in Alaska exists but it is not as dire as it is in the rest of the US. For example, we have 49 foreclosures on the market in the valley right now. That’s almost 2X what it averaged last year and is sure to affect prices. But it is nowhere close to markets in cities like Tucson and Las Vegas.
If you would like to see some of those foreclosures just give me a call at 373-0999.