A new report from online foreclosure sale site, RealtyTrac, shows a 10 percent decrease in foreclosures from the previous month. Foreclosures are still up 18 percent from January of 2008. Good news, no? No.
Yes, banks are getting more and more aggressive in loan modifications, but toward the end of last year we also saw a slew of foreclosure moratoria, from several lenders to Fannie and Freddie . California instituted a new law last fall that delays the process and Florida put a voluntary 45-day freeze on all foreclosures at the beginning of December.
Just yesterday, House Financial Services Committee Chairman urged the eight bank CEOs testifying before his committee to institute foreclosure moratoria until the Treasury Secretary’s $50 billion housing rescue is announced in a few weeks. The Office of Thrift Supervision is urging the same. So far, Citigroup and Bank of America are complying.
But here’s the good news: A new report from the National Association of Realtors shows huge increases in Q4 sales in foreclosure-heavy states. California sales up 85 percent, Nevada sales up 134 percent, Florida sales up 12.5 percent and Arizona sales up 43 percent (all year over year). That means foreclosed properties are selling. Inventory is slowly being absorbed.
It’s a good thing to try to keep some borrowers in their homes by modifying their loans, and so in some respects the moratoria are helpful, but for those borrowers who clearly bit off more than they could chew and will never really be able to afford what they’re in, the fact that there is a market of buyers out there is heartening.
This market can correct naturally, albeit painfully for some.
Questions? Comments? RealtyCheck@cnbc.com