The number of homeowners who were put on notice for being behind on their mortgage payments fell in May to the lowest level since 2006. Although this is good news, it is a result of the slowing housing market and lingering delays in banks’ foreclosure process. Many mortgage lenders are still preoccupied working through foreclosure documentation that arose last fall.
Foreclosure listing firm RealtyTrac Inc. shared that mortgage lenders took back fewer properties in May, being the second monthly decline in a row. There are currently 2 million U.S. homes on the banks’ books or in some stage of forclosure. The delay by the banks is pushing the homes in foreclosure further into the process and is putting banks back on track to own 200,000 fewer homes this year than in 2010. RealtyTrac’s senior vice president replied that “even though it sounds better, that is all of those foreclosure auctions we should have seen this year roll into next year, and that means it’s going to take that much longer for the housing market to recover.” Allegations last fall also slowed the process when banks were accused of relying on false documents when they suddenly foreclosed on thousands of homes. Since then, banks, federal regulators and state attorneys have been reviewing how foreclosures were carried out, making sure they were done the proper way.
Essentially, the extensive reviewing is creating a much longer process for banks, stalling the foreclosure process and making a jam in the way. Mortgage rates are currently quite low. According to Freddie Mac, the average rate on a 30 year fixed mortgage is 4.50 percent this week. Banks have almost 900,000 properties already on their books, so if the ones currently on the market aren’t selling, there’s very little incentive for them to take back more homes that will end up sitting vacant. As a result of the decline in mortages, a federal report shows that household debt also declined in the January- March period at an annual rate of 2 percent from the previous quarter. So where does Nashville stand in this stalemate crisis? “In these times, having just short of 2,000 closings in a month, with more than 2,000 sales pending, is positive news,” said Alice Walker, president of the Greater Nashville Association of Realtors.