The holidays have come and gone with a brief respite from the nation’s home foreclosure woes.
Every holiday season brings a slowdown in foreclosure activity as mortgage lenders such as Fanny Mae catch the Christmas spirit and refuse to evict people until after the New Year. But like a glass of stale champagne on New Year’s Day, reality is about to hit in a bitter way.
The nation will see another wave of bank repossessions in 2012 according to RealtyTrac, an online foreclosure sale website. The reason is that about four million delinquent mortgages are about to hit the pipeline as banks resubmit documents and courts begin to hear cases again.
Overall, foreclosures nationwide are down 14 percent from a year ago, but a surge in defaults that occurred back in August is about to make an impact. Nevada has led the nation in foreclosure rates for the past four years; however, a new process that requires more documentation dropped the state to ninth place in RealtyTrac’s recent survey conducted in November. That left California in the top spot, with Florida, Michigan, Illinois and Georgia rounding out the top five. Michigan had 13,777 houses in some type of foreclosure activity in that survey mainly due to the state’s chronic high unemployment rate.
What this means for struggling homeowners is that the value of their homes will continue to drop at least for the short term. It is possible that government agencies may sell foreclosed properties in bulk to investors, but nothing is confirmed yet. Until the backlog of distressed properties is cleared, there is little expectation of an upward trend in the housing market.
Source: CNBC, “A New Foreclosure Wave is Coming,” Diana Olick, 12/15/2012.