Foreclosure Mess! Short Term Price Stabilization, Long Term Hurt!

Oct. 11, 2010 - PRLog -- Foreclosure Mess!  Short Term Price Stabilization, Long Term Hurt!



This problem just seems to keep getting delayed out more and more every day.   Bank of America announced this morning that they are now extending their moratorium while they investigate their processes from 23 states to all 50 now.    JP Morgan Chase and other big institutions will probably also extend to all 50 states as well as many states Attorney's General are threatening lawsuits on the big banks for improperly foreclosing on many borrowers.  

Banks have already been uncharacteristically halting foreclosures at the auction for years now.  I attend the courthouse auctions on a regular basis.  In San Diego County for example, on average banks are only foreclosing on 5% of the inventory that is scheduled for the foreclosure auction each month, 95% of the inventory scheduled is being delayed.  Read more about this at Foreclosureradar.com   In better economic times banks tend to foreclose quicker so that they can get their money out of these properties and re lend it. Now, it seems they just sit on it and delay indefinitely and this new moratorium will cause even bigger problems.   Short term there will be less inventory on the market, which means we will see price stabilization or maybe even some increases short term.   However, these invevitable foreclosures will just be stacking up in the background.

Let me be clear.   I am all for banks working with homeowners to try to save their homes.   If there is a way for them to help people keep them financially that makes sense for both parties, then I absolutely encourage this.   We don't need any more foreclosures!

However, I am a realist and in many cases homeowners just can't get caught up, especially in this economy where unemployment is so high and many have taken large pay cuts just to keep a job.   Those homes in many cases are bringing down the value of the neighborhoods because they are in many cases no longer being maintained.   If they were to be auctioned to investors or sold as bank owned homes to investors or new buyers, they would be fixed up and help bring back the market value.

I think the banks should be accountable for their foreclosure processes and should be doing everything they can by the book and everything they can to save home owners.   However, at the time they know they can't, they should foreclose and get the property into the hands of a new owner who will bring the property back up to standards.   All of these delays keep delaying the inevitable, there is still a HUGE problem and RECORD numbers of foreclosures and until we deal with it head on, it will affect everyone for many years to come!   The market will correct itself so long that it has the chance to.   It might hurt short term, but get much better long term.   They are approaching it the other way around.

What are your thoughts?  Do you agree or disagree?   Would love to hear your comments and ideas.



To learn more about Foreclosures in San Diego County visit at http://www.fourseasrealty.com.

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