Foreclosures spike in August


Half million dollar house in Salinas, Californ...

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Foreclosures increased 33% from last month according to RealtyTrac.  A large amount of this is attributed to Bank of America.  There was a lawsuit filed claiming that the foreclosure process was fraudulent because they were using an “auto-signature” on paperwork, so that put a stop to a number of foreclosures.  It looks like those foreclosures are now being pushed through the system.  On the bright side, foreclosures are still 33% below  last year…

Mortgage servicers started the foreclosure process on more than 78,800 properties in August, a 33% increase from the month before and the highest monthly increase in four years, according to RealtyTrac

…Overall filings, including default notices, scheduled auctions and bank repossessions, reached 228,098 in August, up 7% from the previous month but still down 33% from last year.

Read Full Article from HousingWire

This is part of the “Shadow Inventory”.  There have been a number of estimates on how large this shadow inventory is. Call this blinding optimism on my part but I don’t believe the shadow inventory will hit the market in large numbers.   I will try to quantify my theory with some data in the coming weeks, but right now I speculate that the banks will work off the inventory with refinancing and short sales.   The banks are getting smarter at this and are realizing that they take a huge bath when they take the property back.  The foreclsoures are still a big problem until employment gets back up where people can meet their obligations again.

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2 Comments

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2 responses to “Foreclosures spike in August

  1. Hi Craig,

    I ran across your blog looking for data about current foreclosures. My only concern about the foreclosure issue is the so-called shadow inventory. My guess is that the robo-signing fiasco has only delayed the inevitable, a flood of foreclosures. Time will tell.

    Michael

    • Michael,
      The shadow inventory is pretty frightening. The numbers that are thrown out there that I have seen are on a national level. I don’t think we (twin cities market) will escape the wave of foreclosures (from the robo-signing halt of foreclosures). I also don’t think we are going to get hit as bad as we have been thinking. I feel a little bit like Bill Murray in Caddyshack “I don’t think the heavy stuff is going to come down in quite some time, I’d keep playing…”
      The twin cities market has been doing a lot of short sales and we have worked off a lot of that shadow inventory, not all of it though.
      Like you said, time will tell. I could be wrong and we could get clobbered here locally. Hope not. I will check around and see if we can find any local shadow inventory estimates…

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