For buyers hunting for spring deals, fewer foreclosures
I've been predicting a surge of bank repossessions, just in time for the spring market.
Turns out I was wrong, at least on the timing.
The theory was that once the robo-signing controversy was settled, major lenders would push ahead with all those home foreclosures they had put on the back burner during the crisis.
But while the major banks are insisting they have resolved their paperwork problems, they are continuing to act gun shy when it comes to lowering the boom on homeowners who have stopped paying their mortgages.
Ten of the biggest home lenders in Massachusetts combined for a paltry 250 foreclosure petitions in February, Banker & Tradesman's Colleen M. Sullivan reports. That's down from 1,651 in September.
In fact, Bank of America has all but stopped filing foreclosure petitions. The bank started foreclosure proceedings on just four homes in Massachusetts this February, down from 462 last September, B&T reports.
Along with the impact of the robo-signing controversy, BofA and other big lenders are also adjusting to a new state law that forces banks to wait 150 days to start foreclosure proceedings after a homeowner stops paying his or her mortgage. That's down from the traditional 90 day grace period.
Still, we are looking at a temporary reprieve here, not a paradigm shift.
Maybe it will take another three months, maybe six, but the big lenders are sitting on thousands of delinquent mortgages here in Massachusetts they eventually will have to deal with.
Just take the big lenders B&T focused on, a group that includes Bofa, Citibank, Wells Fargo, JP Morgan Chase and GMAC.
The difference between the number of foreclosure petitions filed by the big lenders in September compared to February is roughly 1,400. Multiply that over five months and you have 7,000 potential foreclosures or more from just these banks alone waiting to hit the market.
And when that happens, it will put even more downward pressure on prices, already falling as the double dip takes hold.
But for now, it appears the spring market has made a narrow escape.
