Wednesday, March 6, 2013

Banks and Lenders to Foreclose on more Homes in 2013?

Banks and Lenders to Foreclose on more Homes in 2013?

According to an article posted on, a website which states it is dedicated to delivering information “impacting the mortgage default servicing industry”, foreclosures declined in 2012 but are expected to increase in 2013. According to the article, foreclosures dipped in 2012 to 1.84 million nationwide, 3% lower than in 2011 and 36% lower than in 2010, when there were approximately 2.9 million foreclosures. In fact, in December 2012 foreclosures appear to have dropped to a 68-month low! However,

Foreclosures in “judicial” foreclosure states (states where the foreclosure process must go through the court system before being finalized – such as Florida and Ohio) are expected to increase in early 2013. This is because although foreclosure numbers were down in 2012, foreclosure “activity” was up in 2012 in the majority of these states. This likely means that many foreclosure actions initiated in 2012 will make their way through the court systems and be finalized sometime in 2013, perhaps many in early 2013.

Additionally, for different reasons, foreclosures are likely to increase later in 2013 in many states, including “non-judicial” foreclosure states (such as Tennessee and Georgia) and “quasi-judicial” foreclosure states (such as North Carolina) - states where the foreclosure process is less formal and, thus, often “easier” for the lenders to foreclose. This late-year rise in foreclosures is expected in those states in which recent legislation was passed that will have the likely result of slowing down the foreclosure process – at least initially. Predictions are that, as lenders comply with and/or adjust to these new laws, foreclosures will start to increase again, but perhaps not until later in 2013. This may also be the case in some judicial foreclosure states that pass new legislation, such as South Carolina.

So, what does all this mean for the real estate market?  Well, it likely means that it will slowly transition from a seller’s market (while foreclosure inventories are down) to a buyer’s market (as the foreclosure inventories increase). In fact, the article states that sellers received 99% of their asking price on average in 2012, which was undoubtedly due to it being one of the lowest years in foreclosure numbers and, thus, foreclosure inventory, in recent history. If the article and RealtyTrac are correct, as we believe they will be, this is going to change over the course of 2013 and into 2014.

McGrath & Spielberger, PLLC provides assistance to those involved in mortgage disputes, including borrowers in need of mortgage relief services such as mortgage loan modification, foreclosure negotiation, refinancing, and deed-in-lieu or other negotiated settlement resolutions.