Mortgage Foreclosures Ending?

There seems to be some thought that the mortgage foreclosure nightmare is finally ending according to Realty-Trac:

The number of new foreclosure filings in August hit its lowest level in nearly eight years, according to RealtyTrac, an online marketer of foreclosed properties.  Soaring home prices and a big decline in underwater borrowers — those who owe more on their mortgage loans than their homes are worth — have helped drive the trend.

August’s initial foreclosure filings fell 44% to 55,575, just below the 56,063 that were recorded in October 2005. The foreclosure crunch began in summer 2006, at about the same time that housing prices hit their peak.

“This is a strong indicator that the crisis is over,” said Daren Blomquist, vice president at RealtyTrac. “The foreclosure floodwaters have receded in most parts of the country, although lenders and communities continue to clean up the damage left behind,” he added.

The mopping-up process continues, however. In August, for example, the number of homes repossessed by lenders rose 6%, compared with July, to 39,277. But that still represents a drop of 25% year-over-year, and is more than 60% below the peak of repossessions in September, 2010.

While the statistics may indicate that the long-running nightmare of mortgage foreclosures across America may be ending, there is contrarian view that it may just be getting started even this late into 2013. A full five to six years after the mortgage implosion & sub-prime crisis of last decade.

The Realty-Trac statistics do not take into account all of the “Shadow Inventory” being held by the Too Big Too Fail Banks, namely Chase, Citibank, Wells Fargo, and Bank of America. Shadow Inventory are properties held by these banks where the mortgage is past ninety days late, but the banks have not formally foreclosed on them.

The Too Big Too Fail Banks hold literally tens of thousands of these homes. They don’t want ot foreclose on them all at once for two reasons. One if they dumped all of that inventory onto the market it would crash home prices/values. More importantly the banks would have to now show these losses on their books and they would all be bankrupt.

In additon, with all of the “New” government programs going back to very minimal down-payments and again relaxed underwriting standards we are about to creat “The Great Housing Bubble Part 2”! Stay tuned!

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