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Slowing of foreclosure proceedings creates domino effect on housing industry.
The current investigation into faulty foreclosure documentation and procedures has caused a major slowdown in the processing of foreclosures, leading to more trouble on the housing market.
In the past couple of weeks, with Congressional hearings focusing on procedural flaws committed by the nation’s leading lenders, many courts throughout the country have slowed down the foreclosure process by forcing the lenders to scrutinize all of their paperwork before continuing with a foreclosure decision.
As a result, a growing number of homes are sitting in limbo, causing a major glut in an already crowded housing market.
While many experts believe that the major banks will be able to meet current legal challenges, many of the homes currently awaiting foreclosure decisions remain in limbo, and realtors fear that it is continuing to negatively affect housing prices.
Realtors are also fearful that many investors are holding off on investing in foreclosed properties for fear of foreclosure decisions being reversed by courts, further clouding home titles.
ForeclosureRadar, a website that monitors foreclosure activity throughout the country, recently reported that the number of foreclosed homes going to auction has dropped significantly, and with investors wary of purchasing homes at auction, the glut of homes will continue to depress current housing values.
While realtors always welcome new housing inventory hitting the market, they are also afraid that buyers won’t step up and purchase the inventory until the foreclosure document mess has been resolved.
Realtors are also hoping that the current record low interest rates will entice investors back into the market once banks and investigators resolve the current crisis.
Foreclosure process creates domino effect on housing industry.
Sometimes, foreclosure might be necessary when the house is worth less than was previously owed, and for the borrower/homeowner there is no way out. As investors, we have to weigh the risks and always try to make our deals a win/win for both parties. However, concerning the banks and short sales, we have to go with the flow and look for the best deals. Great article.
Sandra
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