walkitout (walkitout) wrote,

Foreclosures Drop NOT Due to Moratorium

Foreclosure filing rates are tracked for a variety of reasons. And foreclosure filing rates have been on-and-off misleading for quite a long while (probably, at this point, years) because various moratoria have been put in place to slow the process down and give homeowners an opportunity to recover.


This headline, however, isn't about moratoria. The banks have gotten into some trouble for trying to rush the process (viz. foreclosing on houses a buyer had paid cash for) and, in the course of doing so, breaking the law in a variety of ways.

"Foreclosure filings have fallen for eight straight months on a year-over-year basis as banks rework their documentation procedures following claims they improperly repossessed homes."

Worse, however, is this:

"Weak demand from buyers is making it difficult for lenders to sell the properties that they already have on their books, known as real estate owned, or REOs, according to RealtyTrac."

Lenders have consistently resisted any strategy that involved writing down principal, which is the only thing likely to keep homeowners in their homes (and that wasn't going to work for everyone anyway). And now they are dealing with the inevitable repercussions. This is not rational, however, it does take time for people to learn. RHI lenders are starting to write down principal on a case by case basis, however, it'll probably be a while yet before we let the bankruptcy courts handle it, which is what we should have done right at the beginning. _THAT_ would have cleared this much faster.
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