Someone ones told me that numbers don't lie, but they can be manipulated. Here is an example, I just read an article titled "Foreclosure Sales Decline Second Straight Month" that makes it sound like it was good news for our market and our economy. I really believe that the numbers are right, but they are not telling an accurate story.
The reason foreclosure sales are down is because the active inventory of REO properties is down due to the robo signing and other factors. I can see that in the past 12 months 90% of the REO transactions have title delays. I guess after the freeze of last year, now title companies have decided to do their job and there have been several delays, up to 7 months for titles to be clear and settlements taking place.
At least in my market in Maryland, the REO inventory has shrunk from last year, I know some brokers have downsized their staff and are now pursuing other venues of revenue like short sales and multi-level network marketing ventures.
But lets face reality the amount of foreclosure files has increase by 1% according to the same article. When I drive around I can see several empty and unkept homes that I know by experience they have been foreclose or they are in the process. I know several "home owners" who still live in their foreclose home after almost a year of the auction date, because the banks are waiting on the courts for the foreclosure ratification, etc.
Lets face it loan modifactions and the lack of control on short sales is not stopping the foreclosure train, it is barely slowing it down. It is a sad thing, but I think there is foreclosure inventory for a long time.
Comments
The single biggest reason for the delay is "mark to market" accounting changes granted to all banks for non performing loans.
In the old days if you had a loan go bad, you moved the asset to liability on the balance sheet and marked the value down to a good faith estimate of current market value. You lost a fair amount of money doing this on paper.
Now no matter what happens the asset is an asset and stays there at full value for as long as you like. UNTIL; you forclose then you write it down to what the F/C sale price was. So why ever foreclose? Just keep all the loans at full value and as assets not liabilities because if they all marked down their loans we would have about 4 solvent banks left!