All the uneducated buyers putting contracts on properties will be in a for one rude awakening when most of the 1.25 MILLION homes put on hold due to fraudulent documents hit the auction block, this does not count new foreclosures.
Don’t believe me? Then again, not many believed robo-signing existed either.
Foreclosures are very, very, very, very far from over.
Credit Slips-
Bloomberg has a story Foreclosure Wave Averted as Doomsayers Defied. I think it’s a great example of defining deviancy downward. There’s no question that we haven’t seen a foreclosure tsunami in the wake of the federal-state servicing fraud settlement. But there was little reason to expect one and let’s not lose sight of the big picture–foreclosure levels are still incredibly high.
Here’s why it didn’t make a lot of sense to expect a huge pick up in foreclosures: there simply isn’t the system bandwidth to handle them. Servicers really can’t move significantly more foreclosures through the courts/trustee systems if they wanted. States have adopted all kinds of approaches that have significantly slowed down the foreclosure process. If I started a foreclosure in New York state today, I probably wouldn’t have title and possession until early 2015. To the extent they could, it would risk pushing down housing prices and triggering more defaults. Moreover, the banks’ plan for several years has been to slowly recognize losses against earnings. If all defaults had been foreclosed at once, the banking system would look a lot less solvent. The game plan has always been to run the clock. Hence all the “kick the can down the road” mods. As a result, what we’re likely to see is not a foreclosure tsunami, but rather an extended foreclosure high-tide.