Next year is probably not going to be very successful for the housing market. This is due to multiple factors. In a post yesterday I discussed my forecast of an guaranteed drop in home values during the coming year. This article, I am going to discuss what appears to be another unavoidable reality of 2011: an increase in the number of foreclosures.
RealityTrac, a data provider, reported that foreclosure activity was down in November. Only 262,000 foreclosure notices were issued, this is down 21% from October and down 14 percent from November 2009. As a matter of fact, this was the first time in almost two years that foreclosure notices fell below 300,000. On the face of it, this low number seems like a good thing. However, realistically the decrease can be directly due to foreclosure moratoriums given out by large-scale mortgage brokers as a result of the terribly sloppy paperwork that caused the whole robo-signing fiasco that is yet unresolved. The decrease in foreclosure activity really just amounts to a temporary escape from the inevitable for many citizens who are in sub-par economic situations.
Senior VP of RealityTrac, Rick Sharga stated:
“In the first quarter, we really anticipate seeing a pretty rapid acceleration of foreclosure proceedings as everybody catches up.”
All the lenders that suspended their foreclosures have since “evaluated” their paperwork and processes and appear to be set to continue foreclosures. A Reuters article from 12/15/11 reported, Bank of America plans to boost foreclosure filings in 2011.
Barbara Dosoer, head of BofA’s home loans segment, boldly commented:
“We feel comfortable with the results we’re getting, so starting in January you will see a ramp-up [in foreclosures].”
The government’s programs in place to prevent foreclosures aren’t providing much relief either. Most notably, the Home Affordable Modification Program (HAMP) federal government’s flagship foreclosure prevention program, was openly criticize by government watchdogs such as the Congressional Oversight Panel and by the media for being essentially “ineffective”. The redefault rate on loans modified by the Home Affordable Modification Program is currently at 21%, and the Treasury itself approximates that the rate could possibly increase to 40% or more by the time everything is settled. See Entire Article.
