United States lenders are notifying more delinquent homeowners they face foreclosure, a step toward clearing a backlog of properties and helping to accelerate a housing recovery, Bloomberg reported.
Initial notices of foreclosure, the start of the process, jumped six per cent in the second quarter from a year earlier, the first annual increase since 2009, according to RealtyTrac Inc, a seller of housing market data. Banks at the same time found alternatives to the final step of seizing the home, either by working with the borrower or by agreeing to sell properties for less than what was owed, with repossessions falling 22 per cent.
“You have to get to the point where the market can heal itself and foreclosures and price adjustments are the only way that can happen,†said Anthony B. Sanders, an economics professor at George Mason University in Fairfax, Virginia.
The housing market’s rebound has been restrained by the so- called shadow inventory of homes with mortgages at least 90 days delinquent, in foreclosure or already owned by banks, while foreclosures had been stalled since late 2010, when state attorneys general and federal regulators began investigating abuses by banks, including lost or doctored paperwork. They started to pick up again after the nation’s five biggest banks settled the probe for $25bn in February.
“The market has to deal with these distressed properties at some point and I believe we’ve delayed it long enough so seeing these increases isn’t necessarily a bad thing,†said Daren Blomquist, a spokesman for Irvine, California-based RealtyTrac. “The market has strengthened and is more equipped to absorb this additional foreclosure inventory.â€ÂÂ
Mortgage delinquencies are dropping, with the share of home loans at least 30 days late dropping to 7.4 per cent in the first quarter from 7.58 per cent in the prior three months, according to the Mortgage Bankers Association.
Demand for real estate is rising amid record-low borrowing costs and tight inventories of available real estate.
Source: Punch
