Since I am involved in the John L. Scott Foreclosure Team, I see what happens every Friday at auction. The amount of homes sold at auction is pitifully small. Those I work with don’t see a flood coming. The banks are starting to realize the folly of some of their choices.
Many housing experts for months have been warning a foreclosure wave would soon flood several markets throughout the country. But was it all a false alarm?
Recent surveys have shown that foreclosure sales have dropped to their lowest point in more than two years. And while according to March data, 8 percent more homes did enter the foreclosure process from the previous month, that number is down more than 30 percent from a year ago, according to Lender Processing Services.
CNBC real estate reporter Diana Olick notes that it could be another delay in the foreclosure system “as banks try to modify more loans to meet some of the terms of the [$25 billion] servicing settlement. The foreclosure sales decline also appears to be exclusively in private and portfolio loans, which again points to the settlement.”
Meanwhile, banks are increasing their number of short-sale transactions, and some surveys have shown that short sales are actually now outpacing foreclosure sales — the first time that’s ever occurred.
“Lenders are increasingly recognizing that short sales may be a better alternative for them than foreclosure,” RealtyTrac’s Daren Blomquist told CNBC. “This trend began in markets with stronger demand and where the distressed inventory tends to be newer homes (Phoenix, Los Angeles, Las Vegas), but the trend appears to be spreading to other markets like Atlanta and Detroit.”
Source: “Flood of Foreclosures Still Fails to Materialize,” CNBC (May 2, 2012)