Preforeclosure inventories dropped 11.8 percent in October from the prior month, largely thanks to a 16.8 percent drop in Notice of Default filings. Foreclosure suspensions led to a 29.9 percent decline in foreclosure sales that went Back to Bank (REO), and a 26.4 percent decline in those Sold to 3rd Parties. Despite the significant decline in new Bank Owned (REO) properties, Bank Owned (REO) inventories actually rose, as REO resales continued to slow.
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The number of foreclosures Sold to 3rd parties, typically investors, declined 15.6 percent in September. Most foreclosure investors flip the properties they purchase after taking care of title, occupancy and repairs. This process is taking 44.5 percent longer than it did a year ago, up from 95 days to 137. The number of foreclosure sales that went back to the bank was up 4.9 percent, while the total inventory of Bank Owned (REO) properties increased by 5.3 percent as REO resales slowed. Notice of Trustee Sale filinges declined 17.2 percent while Notice of Default filings were essentially flat with a decrease of 1.9 percent. Read more
While defaulters living for free may be helping to stimulate the economy with money they can spend on things other than their mortgage, most of the rest of us will feel the pain as the foreclosure freeze delays the healing process for the housing market. Yet some think a delay in foreclosures might not be bad for the banks.
In fact columnist, Peter G. Miller, thinks this delay in foreclosures we've seen so far over the past year or so could have "prevented the financial system appearing significantly worse." He thinks the "national fudging process" of the banks may be able to go on a bit longer as the banks wait "until property values increase for real." Right now the banks are carrying many of these foreclosed properties at a higher value than they are worth today. Once they sell them off, they'll have to report the true value of the assets they are holding. Read More
