Foreclosures keep rising in many states where default actions do not go through the court system, despite the moratorium by some large banks. With just a small percentage of repossessed homes being sold, the glut of REO homes in bank inventories will continue to grow. This is causing some analysts to warn that reducing the rate of foreclosures will not cure a problem that was caused by home values which could not support inflated loan amounts. See the following article from HousingWire for more on this.
The level of foreclosure sales continues to climb in a number of western states that are non-judical and therefore not directly affected by the moratorium imposed by the nation’s largest mortgage lenders.
A record number of properties were foreclosed in Washington last month with 2,007, which is up 55.2% from year ago and 19% higher than August, according to Foreclosureradar.com. The company said just 7.3% of the foreclosures were sold to third-parties, with the rest going back to the bank and pushing REO inventory up nearly 11%.
Foreclosure sales in September also rose in Oregon with an 18.5% jump to a record 967, which is almost 90% higher than the year earlier. Nevada’s sales of foreclosures increased 39.2% last month from August.
Meanwhile, the bank-owned, or REO, inventory in Arizona and California continues to increase, as fewer foreclosed homes are being purchased by investors. Foreclosureradar said the number of foreclosed properties acquired by third parties fell 15.6% in California last month.
“Most foreclosure investors flip the properties they purchase after taking care of title, occupancy and repairs,” the company said. “This process is taking 44.5% longer [in California] than it did a year ago, up from 95 days to 137.”
Arizona’s REO inventory has climbed steadily for a year, rose 4.2% in September, and is now 68% higher than a year ago, according to Foreclosureradar.
The real estate data firm has been tracking foreclosure rates in California since March 2007, and recently began offering data for Arizona, Nevada, Oregon and Washington.
Foreclosureradar said its analysts have yet to see any impact from the foreclosure moratorium in the states it tracks because they don’t handle foreclosures through the courts.
“We regularly see lenders make minor mistakes in foreclosure filings” founder and chief executive Sean O’Toole said. “But the reality is that far more homeowners are behind on their mortgage payments than are even in foreclosure. The clear problem in the housing market today is not foreclosures, but negative equity; and as long as the focus remains on the symptom rather than the disease we will see little progress towards real solutions and this crisis will drag on for years to come.”
On Monday, HousingWire reported the robo-signer debacle is also hindering REO brokers.
This article has been republished from HousingWire. You can also view this article at HousingWire, a mortgage and real estate news site.