Experts at RealtyTrac say the new so-called “Homeowner’s Bill of Rights” that was passed in California, which was modeled after federal legislation and assesses a $7,500 fine to banks that improperly file foreclosure documents, has helped lower foreclosure filings by 7% in the first month of the year and is effectively draining the market for distressed homes. Foreclosures are down 28% since last January and buyers hunting for home deals are finding that the supply is drying up. Discounts for distressed homes that are still available are also falling, which means even less savings for shoppers. For more on this continue reading the following article from TheStreet.
U.S. home foreclosures have fallen to a six-year low, and that trend has hit bargain hunters in the wallet.
Home foreclosure discounts just aren’t as steep as they were in the Great Recession, when buyers could count on scooping up a distressed property for 75 cents on the dollar. Why has a great deal to do with a thinner foreclosure market.
According to RealtyTrac, U.S. foreclosure filings fell 7% from December to January. Foreclosures are also down by 28% from January 2012 through last month.
Like many cultural and economic trends, look to California for a big reason distressed properties are in decline.
"The U.S. foreclosure landscape in January was profoundly altered by the effects of new legislation that took effect in California on the first of the year," says Daren Blomquist, vice president at RealtyTrac. "Dubbed the ‘Homeowners Bill of Rights,’ this legislation extends many of the principles in the national mortgage settlement — including a prohibition on so-called dual tracking and requiring a single point of contact for borrowers facing foreclosure — to all mortgage servicers operating in California."
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Blomquist says the California statutes impose fines of $7,500 per loan to banks and lenders who file "multiple" improper foreclosure documents. That has led to mortgage lenders thinking twice before filing foreclosure notices, and has them exploring other options in dealing with struggling homeowners.
That has cut foreclosures significantly in the Golden State.
"For the first time since January 2007 California did not have the most properties with foreclosure filings of any state," he adds. "Instead that dubious distinction went to Florida, where January foreclosure activity increased on an annual basis for the 11th time in the last 13 months."
With foreclosures at their lowest levels since 2008, bargain shoppers looking for steeply discounted foreclosed homes are coming up empty these days.
Data from the real estate analytical firm FNC shows that foreclosure prices have "bottomed out in recent months."
FNC also notes the foreclosure market has "stabilized" as U.S. home prices have risen in value. That, the firm says, is "encouraging news" for the domestic housing market, which has been in the doldrums since 2007.
"The fact that we are seeing a combination of rising home prices and a bottoming out of foreclosure prices is a very good sign the housing recovery is taking hold," says FNC’s senior research economist, Yanling Mayer. "This is the very first time in the long housing recession that the two are happening at the same time."
In fact, home foreclosure discounts have fallen to pre-recession levels, to about 12% in the fourth quarter of 2012, FNC reports. Back in 2008 and 2009, buyers could count on home foreclosure discounts of 25%, the company says.
"If you look at the period of short-lived recovery under the first-time homebuyer tax credits, the foreclosure market was still in the midst of rapid deterioration with the influx of delinquent mortgages," Mayer says. "This time, we are witnessing an entirely different development in the foreclosure market."
U.S. homeowners should take significant comfort from the latest foreclosure numbers.
With discounts thinning out, and less distressed properties on the market, "regular" home values are rising, and that not only helps homeowners; it adds fuel to an economic recovery looking for any help in shifting out of first gear.
This article was republished with permission from TheStreet.