During the course of 2010, experts predicted that the year’s foreclosure activity would break previous records set in 2009. Unfortunately, that vision came true and over one million homes became real estate owned (REO) properties in 2010. Statistics released by RealtyTrac indicated that a total of 2.9 million foreclosure notices were distributed during 2010 resulting in the final data. Industry insiders agree that the numbers would have been significantly higher if lenders did not cease their foreclosure practices as a result of the robo-signing fiasco.
Behind the Scenes of 2010 Statistics
A majority of Americans opted to bid a not so fine adieu to 2010 as the year was ripe with misfortune, especially in regards to the depressed real estate market created by the mortgage meltdown . While the government launched the Home Affordable Modification Program (HAMP) as a way to help financially struggling home owners affected by the disaster, the program was filled with glitches and many of the loan modifications ended up failing property owners in need. Money.Cnn.com reported that for every one HAMP modifications, 10 new defaults were reported.
Unemployment and lack of income are the other major contributors to the sad foreclosure statistics. Unemployment has been sited as one of the major factors preventing the housing market from stabilizing. During the 2010 time period, approximately 9.5 percent of all workers were unable to get the jobs needed to pay their bills and losing their homes was just one side-effect of the trend. Combined, the two conditions created the perfect landscape for the highest foreclosure rate in American history.
Cease and Desist Prevented Activity From Going Higher
Industry insiders believed that millions more properties were vulnerable to repossession, however, as the robo-signing scandal came to light, lenders halted proceedings. The crisis developed as lenders started to cut corners as a way to streamline their handling of mortgages and prevent that activity from weighing down their system. Banks have been accused of hiring unskilled workers to process the mortgage paperwork, who then in turn did not properly review paperwork or affix their signatures to the legal documentation.
Once the activity was discovered, lenders, including Bank of America, Ally Bank Inc., PNC Financial and Chase all voluntarily ceased foreclosure activity. Thousands of repossession claims did not hit the market in November and December, however, if they did, sources believe that close to 3 million homes would have entered the 2010 foreclosure system.
Expectations for 2011 Repossession
The legal system is starting to react to the robo-signing crisis and so far the scales are tipping in the favor of borrowers who lost their homes due to fraudulent proceedings. In return, it is expected that lenders will start paying closer attention to detail and while that will take more time, James Saccacio, the CEO of RealtyTrac, believes that there are around 250,000 homes at risk and that will carry over into the new year.
While no one can fully predict what is in store for the 2011 real estate market, the sheer number of homeowners with negative equity (AKA underwater mortgages) may be the next risk to the system. As of December 2010, real estate portal Zillow.com has estimated that nearly one in four single family detached homes are in a volatile position.
Although this may all read as doom and gloom, the scenario does indeed have a silver lining for those interested in pursuing the American Dream of home ownership. The nation is filled with a surplus of discounted inventory and mortgage rates are still low and well below the 5 percent mark. Individuals with good credit history and the down payment amount needed to buy a home, will be able to get values unheard of in previous years. Mortgage seekers opting to get in on the action can count on Mortgage Marvel to deliver the competitive and accurate mortgage rates needed for the task.
