Foreclosure Freeze Impacts Sales Prices in Jacksonville

The impact of banks’ previous collective decision to halt foreclosure sales was felt in Jacksonville, the biggest city in Florida. According to data recently released by the Northeast Florida Association of Realtors (NFAR), overall sales of homes in the city dropped by 24.6% in November compared to sales in the same month last year. Analysts mainly attributed the significant year-over-year decline to bank-ordered suspension of foreclosures since October.

Total sales of homes in the metropolitan area of Jacksonville dropped on year-on-year comparison, but it slightly rose to a modest 3% compared to sales in October. Sales rose to 1,001 in November from 968 units sold in the preceding month.

The volume of pending home sales also jumped by more than 22% in November to 1,394 units compared to pending home sales in November 2009. Pending home sales are transactions that are not yet closed or completed and may still be withdrawn.

As usual, when home sales drop in an area, tag prices also fall. Average price of homes in the city dropped 3.2% to $140,750 in November from $145,473 in October. The price average was dragged down by a 21.7% decline in tag prices of lender-mediated sales in the month. NFAR noted that monthly median price of traditional home sales increased by 8.9% to $174,250 from $160,000.

Major mortgage lenders decided in October to temporarily stop their respective foreclosure activities. The action was brought about by allegations from numerous evicted homeowners that their foreclosure documents were mishandled by the banks.

At the height of the investigation by regulators and state attorneys, banks’ ‘robo-signing’ practices were exposed. Through robo-signers, mortgage banks or servicers are able to process and sign thousands of foreclosure documents in as fast as a single day. The problem about such practice is that the documents were approved and implemented even without the necessary and required legal or third-party review.

Some homeowners complain of ‘dual track’ system also observed by mortgage banks. In the scheme, a bank could proceed with foreclosure without notice even if the homeowner is still yet to negotiate for possible loan assistance or loan modification programs.

The freeze on foreclosure was fully implemented in October and November. However, at the onset of December, government-owned mortgage servicers Fannie Mae and Freddie Mac led the resumption of foreclosure activities. Analysts expect the resumption of foreclosures to affect home sales and even price figures in Jacksonville this month.

For more foreclosure news, go to ForeclosureConnections.com.