Foreclosures sink back to 2007 levels

Filings fell 26 percent in 2013, and they may decrease even more this year.

By MSN Real Estate partner Jan 22, 2014 1:20PM

© Dana Hoff, Getty ImagesBy Brian O'Connell, TheStreet.com

 

It has taken more than six years, but the foreclosure market has slid back to pre-Great Recession levels, with foreclosure filings down by 26 percent in all of 2013.

 

Expect that to continue, as the housing market seems resurgent in the new year.

 

In a Jan. 19 USA Today interview, Wells Fargo Chief Executive John Stumpf offered an optimistic outlook for the entire housing market in 2014.

 

Stumpf called for continued growth in home values, along with a conga line of buyers waiving their checkbook at sellers.

 

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"I think you are going to see increases in the value of homes by between 3 percent and 5 percent year over year," Stumpf said. "I think we will see a mortgage market that is largely dominated by purchase money. It would not surprise me if we were in a $1 trillion to $2 trillion mortgage marketplace."

 

If that occurs, nationwide home foreclosures should continue to fall.

 

That's because a healthier housing sector raises the value of virtually all homes, leaving more cash value in residential homes. In addition, a stronger jobs market puts more cash in the pockets of Americans, further reducing foreclosure pressure, while the market may have seen most of the problem home mortgages already fall off the market.

All of that adds up to an increasingly thinned-out foreclosure sector and a healthier housing market.

 

According to RealtyTrac, nationwide residential home foreclosures have fallen by 53 percent from the market peak in 2010, and the foreclosure level of 1.4 million total last year just about matches 2007s total, when 1.3 million foreclosures hit the market.

 

Some states still face a struggle with foreclosures, with Florida, Nevada, New York, New Jersey, Illinois, Maryland and Ohio topping RealtyTrac's "severely troubled" mortgage list. In fact, New Jersey, Maryland and New York all saw increases in foreclosures from 2012 to last year, as most states saw decreases.

 

A big part of the foreclosure hangover in New York and New Jersey is that the legal wrangling between lenders and struggling homeowners in those states takes so long -- 1,0129 days and 999 days, respectively.

 

Still, the bigger picture reveals a sunnier homeownership climate, especially compared with the dark days of 2009 and 2010.

 

"Millions of homeowners are still living in the shadow of the massive foreclosure crisis that the country experienced over the past eight years since the housing price bubble burst -- both in the form of homes lost to directly to foreclosure as well as home equity lost as a result of a flood of discounted distressed sales," says Daren Blomquist, vice president at RealtyTrac. "But the shadow cast by the foreclosure crisis is shrinking as fewer distressed properties enter foreclosure and properties already in foreclosure are poised to exit in greater numbers in 2014."

 

More from TheStreet.com

 

 
20Comments
Jan 27, 2014 6:27PM
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Note: The debt forgiveness act has expired. This will make homeowners responsible for taxes on forgiven debt by their lenders. This will in turn dry up "strategic defaults" and other tactics that added to the foreclosure debacle. Stay tuned...... 
Jan 27, 2014 12:28PM
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housing data out today lowers stock market now this article,you people are so full of shite it,s coming out your ears!
Jan 27, 2014 9:15AM
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The first part of explaining why foreclosures have gone down is that most states have changed from "non-judicial" foreclosures to "judicial" foreclosures. This means the banks can no longer send foreclosure letters without going through a judicial and/or mediation process. It has greatly slowed down the number of foreclosure filings because the banks are reluctant to spend all the legal fees of going through the "judicial" foreclosure process.

Second, the banks now own so many foreclosed properties that are impacting their reserve rations with the (non federal) federal reserve (it's a private corporation).

Third, the over abundance of homes that the banks have stolen from the American public are becoming dilapidated and moldy because they are un-occupied. The banks have to hire third parties to check on empty houses and do any necessary repairs for upkeep, an expense the banks hate. The banks, therefore, are allowing people to stay in their homes longer as long as they keep the heat and water on, and keep the property maintained.

This story is as erroneous as the false unemployment statistics propaganda put out by the government. There are around 90 million unemployed Americans. Eventually, the banks will own everything. Thomas Jefferson warned us about this, but we allowed the take over in 1913.

Jan 23, 2014 1:06PM
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There's a more simple explanation: fewer people own homes now.
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Unfortunately, I am sure there are more to come.

More people are using the short sale now versus just walking away from homes. 

Additionally, there are a number of current homeowners upside down in their mortgages so they cant sell or use the house equity if they have a life changing event and need to liquidate for cash.

Granted most people that got in these positions did it themselves

Jan 23, 2014 7:55AM
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WHO PUTS THE VALUE ON LAND AND HOUSES? 

 

Pretty soon humans will be living in the streets or in tents like the old days,  if the market continues the way is going.......

 

IT IS CRAZY!

 

Only the wealthy have the right to live in nice homes. THAT IS DISCRIMINATION

 

Jan 22, 2014 5:00PM
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I am still holdng on and the market is getting very interesting indeed.  I believe 2014 will be a good year to refinance; however, that is just my intuition.  I hope everyone who has held on and not let these crooks take your home away from you for near pennies, I praise you for holding on and you will reap what you have sown, just will take a little longer.  I for one have been through this now for 7 years and am still holding on and will refinance this year.  I am in hopes that others will be fortunate in accomplishing what they can afford and need in 2014, this is my daily prayer
Jan 22, 2014 4:55PM
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Foreclosures appear to be going down, and I do emphasize "appear," but short sales are going up.  Homeowners are being talked into short sales by the mortgage banks to avoid foreclosures, but then the banks are reporting the homeowners to the credit bureaus as foreclosures.  The housing market is NOT getting better and everything is NOT as it APPEARS!!!! 



Jan 22, 2014 4:52PM
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Is this how we measure success now a days?
Jan 22, 2014 4:41PM
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An improvement in the statistics of this disaster is no cause for celebration, reserve that for the time when those that "govern" us learn from their botched meddling in the market.


But sadly they seem to believe that the only cure for meddling in the market is further meddling.

 

Jan 22, 2014 4:40PM
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Foreclosures will keep coming down as long as people live within their means and pay back what they agreed too.
Jan 22, 2014 4:38PM
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Subprime homeowners, as I use that term loosely, have finally been weeded out.  The days of having a $250,000 house on a McD's income has passed by.  The homeowners and soon to be homeowners like ourselves will reap the benefit of having homes being purchased for values much more reasonable to what they are really worth not what they are worth in some a-holes portfolio.

My sympathy to all those who lost homes, but a good % of those that lost knew they should not have been in the home in the first place. 

Jan 22, 2014 4:31PM
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Many people are forced into foreclosure because they can't sell their home before the foreclosure proceedings begin, and many people can't sell their homes because they don't have enough equity or cash to pay a real estate agent to get it sold fast. Of course, fees that listing agents charge to sell real estate are negotiable. This problem (of real estate agent affordability) has triggered a few places online where homeowners can let real estate agents compete for listings, such as RateBid. The website even keeps the homeowners anonymous while they can sit back and enjoy the "fight" between the real estate agents. If a homeowner can get a $500K house sold for a 5% fee, rather than a 6% fee, then there is $5,000 in savings right there (not to mention the fact that a professional and experienced real estate agent can probably sell the home for a higher price).


Actually, RateBid lets people do the same thing for mortgages, meaning borrowers stay anonymous while mortgage lenders bid their rates and fees against each other. All of this allows homeowners to avoid a bunch of sales calls and uncomfortable negotiations over the phone; the power of competition drives down rates. I have referred people to the website with highly unusual refinance mortgage situations because borrowers can describe their "issue" that they may be having in an optional comments box, and you never know what type of portfolio or hard money lender may be willing to take the risk and lend the money, since these "posts" are delivered to an endless supply of mortgage lenders.


Hopefully these types of places can prevent some additional foreclosures from occurring this year.

Jan 22, 2014 4:25PM
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2007 was the highest ever for foreclosures.  So if the foreclosures are "down to the level of 2007," that would be pretty scary..and a LARGE number...a huge number...when they get down to pre-2005 levels, you will know we are then, truly in a recovery mode. 


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