Slow Foreclosures

The decrease in foreclosure sales has remained low since U.S. banks slowed down the sales over a year ago. Sales of many foreclosed homes were suspended last September. Many financial firms did the same when discovering that their employees had been signing off on thousands of loans a week, claiming they had reviewed each case personally.

Judges soon began to question how banks were documenting their ownership of loans and if this documentation was legitimate. This attracted more attention to the case.

Lenders are now dealing with foreclosed homes again and loan services have insisted they are investing more time into their systems to avoid any problems to reoccur. However, a great deal of mortgage servicing companies are taking such great caution in moving slowly, that the amount of properties becoming foreclosed is exceeding the total amount of properties sold or being took over by the banks. In August 2010, 5.7% of loans in foreclosures had been liquidated. Whereas in June of 2011, it was only 3.6%.

This decrease indicates that banks are taking back fewer homes, allotting them with less to sell. In a short time view, this is beneficial for the economy since the supply of distressed houses and condos has decreased. However, this also means that it is taking much longer to sell foreclosed properties to buys, leaving these properties on the housing market.

With bank employees signing off loans blindly, this created a huge legal, regulatory and public relations issue which is still following banks today. Although banks are claiming they have not been able to prove wrongful foreclosures, they are still admitting the error. A settlement of $25 billion paid by the servicers is being talked about, but is currently on hold.

Banks have been working hard to improve this and practices are much better than they were a year ago.

In Michigan, mortgage companies have been pulling properties off the market after a state appeals court decided that specific foreclosed properties hadn’t met the state’s legal requirements. Title insurers had to immediately cease underwriting policies for many properties owned by the bank. To fix title problems, mortgage companies began “re-foreclosing” those houses.

Other states, such as New York requested that lawyers for mortgage companies had to sign affidavits confirming that documentation from clients were accurate and legitimate. The state currently has the lowest fore-closure completion rate in the nation.

Hopefully, in the near future, the legal settlements on banks will assist the country’s housing market and allow banks to accelerate the foreclosure process once again.

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8 years ago by in Foreclosures , Home News | You can follow any responses to this entry through the RSS feed. You can leave a response, or trackback from your own site.
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