Ever since the mortgage meltdown back in 2007, there has been a steady increase of home foreclosures up until 2010 when there was a slight decrease. After that RealtyTrac predicted there would be a 20% increase in foreclosure of houses over 2010 and into 2011. Instead, in 2010 the actual number declined to 804,000 from 1.2 million in 2009. In 2011, the US saw a further decline of 34% making experts wonder if it’s a good idea to use these numbers as a barometer for the economy. Looking at the entire picture these statistics don’t tell the entire story of what’s happening to homeowners and the prices in the nation’s housing market.
What the numbers don’t tell us is there was a large decline due to the effects of the 2010 robo-signing controversy, where a large number of loan servicers have been accused of signing documents they never read.
Many experts have implied that some lenders have delayed the foreclosure process on many homes because of the large number of unsold homes currently on the market. With 2012 in full swing, there are many worried about the market being flooded with new foreclosure homes, washing out any remaining value of the current stock. Many are also wondering if the bankruptcy filing rate will increase to stop foreclosure.
Economist Joel Naroff, Naroff Economic Advisers believes that 2012 will see a growing number of foreclosures entering the market to continue a downward pressure on housing prices especially in areas of the country where there are a large number of defaults.
The Fed recently forecasted that they felt the US would see 1.5 million foreclosures per year until 2015 and suggested that banks should find a way to convert foreclosure houses into rental properties until the housing market returns. Many in Congress were unhappy of the Fed’s idea.