What's Happening with Foreclosures ?Posted by Bill Zinsser on Thursday, April 19th, 2012 at 8:29am.
The number of foreclosure properties sold at auction, or trustee sales, dropped steeply for the second straight month, a March report from online listing service ForeclosureRadar.com shows.
Notices of default, the first step in the foreclosure process, decreased 77 percent to 1,136, and notices of trustee sale decreased 74.3 percent to 1,550. Average time to foreclose increased 22.4 percent to 404 days
It's easy to see why some analysts continue to predict a wave of foreclosures.
That won't happen because of financial regulations that were changed in 2008 to help banks remain solvent. Before the Troubled Asset Relief Program, a government program to purchase assets and equity from financial institutions, the lender had to take a loss on the nonperforming loan when it went into foreclosure.
Under TARP, banks don't take the loss until they actually foreclose on the loan. This essentially stalled the foreclosure activity as lenders started to use foreclosures as balance sheet management. It's in their best interest to delay foreclosures through whatever means necessary.
"Clearly we still have far too many homeowners in trouble, and with the recent attorney general settlement over robo-signing and other issues, it seems completely logical that a wave of foreclosures would follow. It won't.
"To reach the conclusion that there will be a wave of foreclosures, you have to assume that the banks either want to foreclose - they don't - or will be forced to foreclose - they won't.
I don't see that changing anytime soon."