Thousands of homes in foreclosure have been waiting to be processed by mortgage lenders are finally beginning to make their way through the pipeline, says a new report by RealtyTrac, an online marketplace for foreclosed properties. As a result, the number of filings climbed by 7 percent in October.
Delayed Foreclosure Paperwork Finally Being Processed
The housing industry has been struggling to get back on its feet since it crashed in 2008. Despite millions losing their homes due to job loss and an increase in monthly payments thanks to ballooning mortgage costs, many homebuyers attempted to get back into the market with the help of the First Time Home Buyer Credit.
However, as some were buying homes, more were still being evicted– wrongfully at times– as a result of the robo-signing scandal, which revealed that many big mortgage lenders were bypassing the process of receiving court approval as required by their states. The result of the scandal was a freeze that created a foreclosure backlog.
According to the RealtyTrac report, the backlog has had a continued effect on the market. Not only were 230,678 foreclosure filings reported in October, but one in every 563 homes had a default notice, scheduled auction or bank repossession during the month.
Consumers Aren’t Responding to Low Mortgage Rates
The troubles that the housing market has seen in recent years are not likely to go away anytime soon. This is because, not only is the market facing a backlog of homes on foreclosure, which keeps neighborhoods empty, depresses home values and creates underwater mortgages, but consumers who would have purchased homes under normal circumstances are afraid to do so.
While the unemployment rate made a slight drop to 9 percent last week, 13.9 million were still without jobs in October. Employment instability leaves prospective homeowners feeling uncertain of their ability to manage a long-term debt, even though the 30-year fixed mortgage rate dropped below 4 percent for the first time in history last month.
Many agree that the best way to address all of the issues the housing market is facing is to improve the overall economy. With lawmakers failing to agree on a bill to create secure employment, however, and foreclosures still infiltrating neighborhoods, experts say recovery in the near future is next to impossible.
