Pace of foreclosures slows down, but the problem has not ended yet
Though foreclosure has slowed down, the heavily eroded home prices are a good deal for the new homebuyers.
The crisis of foreclosure has just entered into a new phase. Reports show that the pace of foreclosure has stepped down leading to a situation where the number of foreclosures equals the number of repossessions. According to a report,
the number of defaulters has decreased by 30% this August. This means that fewer numbers of homeowners are losing their homes. However, a record number of foreclosures were registered this year in August compared to the figures during the same period last year. 95,000 properties went into foreclosure in August 2010, whereas the figure was at 76,000 in August 2009.
The banks are delaying in sending notices to the defaulters. There are major reasons for this delay from the lenders.
- As soon as the lenders send out the notices, the clock starts ticking for them. Then, they are required to complete foreclosures within a given time frame in compliance to the state regulations. But, sometimes, the banks are required to foreclose before they actually want to do so.
- The next reason is that the debtors may simply vacate their properties after receiving foreclosure notice. This can lead to vandalism and then the lenders are forced to take over and maintain the properties. This incurs a huge cost.
So, if the banks send out notices to the borrowers, they will generally complete the foreclosure proceeding quite quickly. However, there are chances that the banks will not immediately put the properties on market for sale to suppress the erosion of property prices further. This will give a chance to the housing market to improve.
However, the damage has already been done and the discounts available for the foreclosed properties have reached as high as 26% with steep variations visible in different states. This discount amount is good news for the prospective homebuyers.
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