The latest data shows that foreclosures have slowed across the country falling 9 percent in April from the previous month and down 34 percent from last year. Yet that news is hardly a harbinger of a housing market recovery. In fact, it may actually indicate an even longer mortgage market turn-around than originally expected.
“Foreclosure activity decreased on an annual basis for the seventh straight month in April, bringing foreclosure activity to a 40-month low,” said James J. Saccacio, chief executive officer of RealtyTrac in a news release. “This slowdown continues to be largely the result of massive delays in processing foreclosures rather than the result of a housing recovery that is lifting people out of foreclosure.”
Those delays are a result of the “robo-signing” mess banks are currently negotiating themselves out of. After several of the big banks were exposed last fall for bypassing necessary legal steps in the foreclosure process, they have had to move much more cautiously in the following months.
Saccacio breaks this down:
“The first delay occurs between delinquency and foreclosure, when lenders and services are no longer automatically pushing loans that are more than 90 days delinquent into foreclosure but are waiting longer to allow for loan modifications, short sales and possibly other disposition alternatives. Data from the Mortgage Bankers Association shows that about 3.7 million properties are in this seriously delinquent stage. The second delay occurs after foreclosure has started, when lenders are taking much longer than they were just a few years ago to complete the foreclosure process.”
Is there anything good about this report then?
If the glutted foreclosure market may holds one truly positive point, says Sharga (as quoted in a PBS.org article), it may be that we are finally near or at bottom in the housing mess. The fact that banks are looking for other options besides foreclosure means they may at least have a handle on the size of the problem.
Unfortunately, from the size of the foreclosure problem, it looks like we could be at that bottom for quite some time.