Foreclosures Soaring Ignoring Rescue Efforts

Posted on August 20, 2008
Filed Under Repo Homes |

Foreclosures are soaring ignoring all rescue efforts made by the government and lenders to stem the tide. Loan terms are being eased to allow for refinancing. Even houses are being allowed to be sold despite the fact that more often than not, in the present situation, the values of the houses have become less than the loan amount. But even these types of short sales are not putting a check on foreclosures.

According to RealtyTrac the banks repossessions in July trebled the number of houses taken over in the previous year in the same month. The foreclosure rate was 1:464 in July 2008 across USA. Many experts opine that the epidemic has still not spent its full strength – there is more yet to come.

Susan Wachter a real estate professor of Pennsylvania University thinks that the peak will be from July to December this year. This is assuming that there will be neither increase in interest nor decrease in GDP. If this hurdle can be crossed then the “darkest scenario” will be over.

The increase in the number of bank repossessed foreclosed houses is dragging down the average selling price single-family houses. About a third of the houses sitting on the shop shelves are either owned by the bank or belonging to the short-sale category. . In the second quarter of this year the average price of a house fell by 7.6% from what it was during the same period in 2007 according to the findings of National Association of Realtors. The price fell from $223,500 to $206,500.

Dominic De Sinone of law firm Ballard Spahr Andrews & Ingersoll commented that foreclosure victims reach a dead end when they fail to reach a workout with the lender. For them there is nothing left but to accept foreclosure. It is the slump in the real estate market that is aggravating the situation.

Government in tandem with non-profit organizations and lenders has been trying to find out remedial measures to halt foreclosures. Some have benefited from the various plans and programmes that have been launched. But considering the magnitude of the problem these are just drops in the Ocean.

One of these helping bodies is Hope Now. It consists of an alliance of housing counselors and lenders. They claim to have negotiated 181,000 workouts in June. Unfortunately in June 252,363 foreclosure notices were posted. In the second quarter all total there were 739,714 foreclosure listings according to RealtyTrac.