The robo-signing scandals of 2010 sent shockwaves through the lending industry, as national banks, burdened with the considerable weight of thousands upon thousands of foreclosures, short sales and other distressed properties, attempted to reconcile their balance sheets as quickly as possible – and in the process, foreclosed on properties with timely mortgages, properties without any mortgages at all, and even properties with mortgages from other banks.
The furor that stemmed from robo-signing effectively halted the main banks’ foreclosure proceedings, and as a result, foreclosures fell considerably. A new report from the The L.A. Times, though, highlights what has been reported in other outlets over the last couple weeks – that banks are upping their foreclosures once again, and the honeymoon for some distressed homeowners may be over.
“Banks are reasserting themselves against troubled borrowers, sending close to 78,000 properties into the first stage of the foreclosure process in October after a nearly yearlong slowdown brought on by increased scrutiny from regulators,” reports Alejandro Lazo for the Times.
In total, 230,678 U.S. homes were served with foreclosure actions in October, Lazo reports, a 7 percent increase from September, while 77,733 homes entered the foreclosure process, a 10 percent increase, and 67,624 homes were repossessed, a 4 percent increase.
James Saccacio, the chief executive of RealtyTrac, the data company that provided all of the article’s foreclosure statistics, said that the latest batch of data suggests that banks are re-upping their emphasis on foreclosures.
“The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems,” Saccacio said.
Such an influx of foreclosures, according to some economists, may put further downward pressure on home prices, which are already at their most affordable level in several decades. As Celia Chen, a housing analyst for Moody’s Economy, told Lazo, more foreclosures means more distressed, underpriced homes sitting on the market and lowering the values of adjacent properties.
“Within the next couple quarters, or next several months, the share of distressed sales is going to rise,” Chen said. “That will place a weight on house prices, and I do expect to see more house price depreciation.”
According to additional data from RealtyTrac, in Cook County, there was one foreclosure for every 350 properties in October, with the Country Club Hills area leading the way at one foreclosure for every 104 properties.