Foreclosure rates are down, not only in Bay County, but across the country. Good news, right? Well, not really. Even though the pace of foreclosure filings is down, mortgage delinquencies are still very high. So what’s going on?
Ever hear of “robo-signing”? Back in September of 2010, there was a big scandal. Several big lenders were accused of rushing their foreclosure cases through the system and not properly preparing their documents. They were also accused of having unqualified and untrained staff sign those documents without proper review (hence the term “robo-signing”).
When the charges became public, these lenders basically halted all on-going foreclosure proceedings. They even went as far as to pull some of the houses they had already taken back off the market so they could revisit the files and make sure that they didn’t have any title problems. One Realtor that I know lost 35 listings from a foreclosure lender in one day!
Since that time, foreclosure filings have slowed to a crawl. The problem is, there are still lots of loans that are delinquent, and that will have to be foreclosed in the future. Those to-be-foreclosed properties are building up like floodwaters behind a dam. Sooner or later that backlog will be released, and I think it will cause another spike in distressed inventory, which means another dip in prices.
When will that happen? I have no idea. But some recent news stories indicate that the foreclosure moratorium may be coming to an end, so I expect to see and increase in filings any time. For more information, read the news articles here and here.