Economists predict a new wave of foreclosures in 2012
Although the robo-signing scandal and resulting foreclosure slowdown happened nearly a year ago, it seems to still be affecting foreclosure activity in a fairly major way. Specifically, movement on repossessions and foreclosures has slowed down significantly in the past year as banks have worked through their paperwork problems. But according to housing market analysts, that slowdown will likely end in the coming months as banks begin to push foreclosure documents through the courts.
In sum, there are currently about four million delinquent loans that are scheduled to be pushed through the foreclosure pipeline in the coming months. Although most banks will continue processing foreclosure documents through the holidays, most have said that they will wait until next year to actually evict any homeowners. However, this likely provides little relief for the millions of residents who will spend the first part of 2012 dealing with foreclosure.
Unfortunately, state and federal efforts to keep homeowners in their homes have largely proven ineffective, and several of the hardest hit states continue to deal with high foreclosure rates. Recently, Georgia rose into the top five states in the nation in terms of rates of foreclosure, and with the prediction of the coming wave of repossessions, the situation is likely to only get worse.
In addition, the swell of foreclosures will add pressure on a housing market that is already struggling to stay afloat. Currently, foreclosure starts outnumber home sales by three to one. Further, an increase in foreclosed homes could drive home prices down even further, pushing more homeowners underwater and making it more difficult for them to sell homes they can no longer afford to keep.
Source: CNBC, “New Foreclosure Wave is Coming,” Diana Olick, Dec. 15, 2011