First Half of 2011 Witnesses Steep Drop in Foreclosure Rates
Real estate (NYSE:IYR) marketing firm RealtyTrac reports that in the first half of 2011 the number of foreclosure fillings dropped by 29% (from 2010) and 25% in the past six months. Through June 30th 1.2 million or 1/111 households had received a filing for foreclosure. This year’s second quarter in particular saw a huge decline in foreclosures, as it marked the lowest volume (608,235) since late 2007. RealtyTrac execs though warn that the data is deceptive, as the “drop-off in filings can be traced not to economic improvement or a pick-up in the housing market, but to processing delays brought on by the robo-signing scandal in which it was discovered that bank employees were signing foreclosure documents without following proper protocols.”
According to CEO James Saccachio, this could keep the housing market at rock bottom for longer than necessary, “[That’s what is] pushing foreclosures further and further out — we estimate that as many as 1 million foreclosure actions that should have taken place in 2011 will now happen in 2012, or perhaps even later…This casts an ominous shadow over the housing market where recovery is unlikely to happen until the current and forthcoming inventory of distressed properties can be whittled down to a manageable number.”
The average time it took for banks last quarter to process a foreclosure was 318 days, up 15% from last year. Processing times vary widely by state too, with sluggards New York, New Jersey, and Florida, taking 966 days, 944 days and 676 days to get through the average foreclosure, compared to speedy states like Texas (92 days) and Virginia (106 days).
Experts, including Fed. Reserve Chairman Bernanke who called the housing market the one issue left “unaddressed” by the stimulus, say the government needs to step-up its efforts to clear the market of foreclosed homes, or risks forestalling an already sputtering recovery. Arnold King, formerly of Freddie Mac, added, “The government should be trying to speed foreclosures, not stop them. Postponing foreclosures may simply be putting off the inevitable market bottom. We need to remove barriers to foreclosures…Instead of housing returning to somewhat normal condition by 2014, we’re looking at 2015 or even 2016.”