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Loading ...Last year ended with a 17 percent increase to 303,410 in the number of homes repossessed for December, according to RealtyTrac, which collects and compiles foreclosure data from over 2,200 counties in the United States.
The sudden increase in numbers is attributed to the decreasing effect of state laws expected to temporarily prevent the rise in the number of abandoned homes by extending the notification period for borrowers.
However, foreclosure activities declined by 4 percent during the last quarter of the year despite the increase in the number of repossessed homes and the worsening state of the housing market.
RealtyTrac Chief Executive Officer James J. Saccacio said that programs designed to prevent the increase in the number of distressed properties failed to slow down the foreclosure crisis.
He adds that laws in several states, such as California, Maryland and Massachusetts, appear to have only delayed the inevitable outcome for thousands of borrowers.
The goal of the prevention programs is to buy time. Increasing foreclosures means falling home prices, and decreasing home prices increases bank repossessions.
Inside Mortgage Finance publisher Guy Cecala believes that delaying the process of repossessing a home can be costly for lenders, investors and servicers. He adds that lenders cannot handle all mortgage servicing cases because of their problem with staffing levels.
Meanwhile, the increased in foreclosures due to state laws was heightened by moratoriums started in 2008 by government-sponsored enterprises, Federal National Mortgage Association and Federal Home Loan Mortgage Corp. and other major lenders, such as Citigroup and JPMorgan Chase.
These moratoriums were temporary and ended last holiday season, indicating that January’s data will probably be worse than the previous month’s figures.
On the other hand, the federal government still continues its own programs to help stop the housing crisis. Already, the incoming administration of President-elect Barack Obama has pledged to use a portion of the remaining second half of the Troubled Asset Relief Program money to help homeowners at risk of losing their properties.
