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Rita Nelson

ABR, CRS, GRI
eXp Realty LLC
(281) 773-6332 
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FORECLOSURE TRENDS

October 11th, 2010

Attorney generals in all
 50 states are planning a
joint investigation into
potentially faulty
 foreclosures at the largest
 banks and mortgage firms.

Texas Attorney General
 Greg Abbott asked 30 lenders including Wells Fargo- the
state's largest
mortgage company,
Bank of America-
 the second largest, and
J.P. Morgan Chase - the
third largest, to put a
hold on foreclosures
until their processes and
documents can be examined
 and deemed compliant with
 states' legal requirements.

George Roddy, president of Foreclosures Listing Service,
told the firm's subscribers
 he does not believe any
government attempt to
implement a foreclosure
 moratorium in Texas will
affect the foreclosure rate.
  •  
     
    Highlights
    • Homeowners in some states get relief from the foreclosure process.
    • Prices may rise with falling supply of for-sale foreclosure homes.
    • Buyers who get a clear title can eliminate potential risks.

    Recently, several major lenders suspended  foreclosures as they review irregularities in legal paperwork. These suspensions could have a significant impact on today's homebuyers and sellers.

    The extent of disruption will depend largely on how long banks hold up foreclosures in states that require a judicial foreclosure process. During these suspensions, banks will review affidavits that have been challenged.

    If the problems are resolved quickly, the impact may be minor, according to Rick Sharga, senior vice president at RealtyTrac, a national foreclosure-tracking service in Irvine, Calif.

    "We should see a slowdown in new foreclosures and foreclosure processing over the next two to three months, followed by an accelerated rate of foreclosure activity in the first quarter of 2011, and then we'll be more or less back to normal," he says.The risk, however, is that foreclosure delays could drag into next year or be expanded to more states -- as already has begun to happen.

    "The concern is the potential implications for the overall housing market and economy," Sharga says. "If you freeze the sale of homes that have been repossessed and are in foreclosure, you will wipe out 30 percent of all home sales. That's like finding a patient who's in intensive care and unplugging some of the tubes."

    Outlook for sellers

    The foreclosure delays may impact sellers in several ways.

    Homeowners in foreclosure who hope to sell may get a "temporary break" before the process moves forward. That would allow them to live in their home awhile longer and potentially close a short sale. Or, they could negotiate a loan modification to avoid foreclosure.

    Home sellers who aren't in foreclosure also may benefit as banks take foreclosed homes off the market. The diminished supply could put upward pressure on prices.

    Sellers may need to act quickly if they want to take advantage of that window.

    It's positive short-term news for sellers because they won't be competing against the inventory of distressed properties.

    Outlook for buyers

    Potential homebuyers who previously considered shopping for foreclosures may be scared off by the recent negative news reports. But  there's no reason for buyers to delay their plans as long as they can get a clear title to the property and title insurance.

    However, some buyers remain worried. Buyers in Texas are concerned about recent developments, even though the state doesn't require foreclosures to go through a judicial process. Texas Attorney General Greg Abbott has demanded certain lenders forestall all foreclosures in the state, though it's unclear how many will cooperate.

    Overall, the bottom line is that affected housing markets are now in a state of heightened uncertainty that presents both risks and opportunities for buyers and sellers to carefully weigh.

    Sources - Marcie Geff / Bankrate.com
    Chron.com / NANCY SARNOFF



Disclaimer : The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the Houston Association of REALTORS®
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