Well, we certainly have felt the squeeze from major lenders NOT extending trustee sales…even in our active short sales…
The reason comes as no surprise, as banks have allowed homeowners to “live rent free” due to the mass amount of homes mortgages that are in trouble. Banks basically looked at the defaulting “home” not being “their” problem if they did not take it to foreclosure. With NO foreclosure there is no accountability to report to shareholders of loss!
Last week was a real eye opener for our own business…we lost two homes to foreclosure that were in active short sale, approvals were less than 30 days out. Chase actually held the lien on one of the homes, the negotiator told us that the mandate is NO EXTENSIONS on Trustee Sales...no matter what! Our source at Wachovia tells us the same goes for them, with over 50,000 home mortgages falling into the bucket of not paying for over a year…! They have no choice but to send a message to homeowners.
Read more below:
The nation’s banks repossessed a record number of homes in August, according to industry sources. RealtyTrac, an online foreclosure sale site, will release its monthly numbers on Thursday, but sources there confirm the number of repossessions will come in just shy of 100,000 for the month.
That is the highest since the site began tracking in 2005. July’s repossession number was the second highest on record. The last highest was 93,777 in May of 2010.
Notices of Default, which are the first step in the foreclosure process, are up slightly but mostly thanks to a jump in California, where the numbers had been artificially low of late, as banks tried to modify borrowers.
“With respect to the NOD increase, I think it is the modification redefault wave beginning to build and new modifications slowing to a trickle, indicating banks have lost their primary borrower re-leveraging tool,” says mortgage industry consultant Mark Hanson.
Yesterday J.P. Morgan Chase [JPM 40.92 -0.20 (-0.49%) ] cited the “shadow inventory” of foreclosed properties as one of their primary reasons for pushing back their expectations for a housing recovery as far as 2014. No question, a growing supply of repossessed properties will put further downward pressure on home prices, especially given the current 12.5 month supply of existing homes already for sale.
The question now is: Where does the government go from here? Some argue that housing needs to correct on its own, without artificial stimulus, as painful as it will be, in order to recover fully. What the Obama Administration has to decide is, will that correction, involving millions of foreclosures, take too large a toll on the greater economy?
By: Diana Olick
