Many experts have long predicted that a new wave of foreclosures would occur when banks were permitted to proceed with foreclosures in 2012. Many foreclosures had been stalled due to various legal challenges that questioned whether banks had property filed legal paperwork required to foreclose on real estate. Since reaching agreement with the U.S. Government and various states, banks have proceeded to foreclose on many homes, however statistics show otherwise.
According to the Wall Street Journal, new foreclosure filings were down over 30% compared to the same period last year. Delinquent mortgages are down over 10% from last year. Is it the end of foreclosures? Probably not, but more banks and homeowners are working out creative solutions to avoid foreclosure. The Wall Street Journal reports much of the change in activity is due to the $25 Billion mortgage servicing settlement the feds reached with banks in February. The settlement requires that $17 Billion be used to keep homeowners in their homes, including $10 Billion to write down loan balances.
While lenders continue to sort through their portfolios of non-performing mortgages, many delinquent homeowners are finding that banks are anxious to work out solutions that include short sales, loan modifications and forbearance, as well as mortgage balance write-downs. The new settlement is expected to allow banks to work out solutions that do not involve foreclosure. The resulting effect on the real estate market remains uncertain, but most certainly it will mean that foreclosures will “drip” onto the market, rather than come in a big wave. The result should be a continued stabilization of real estate values. Most realtors are predicting a slight gain in most real estate markets in 2012.