Have Banks Stopped Foreclosing?
There are several articles out today commenting on the decline on foreclosure activity.
The ivory-tower types are quick to give credit to the CA Homeowners Bill of Rights, or to short sales being the preferred method of liquidation, instead of foreclosure.
Here are excerpts from this latimes.com article entitled, “California’s Housing Recovery May Gain Momentum, experts say”:
While dramatic, the drop is part of a general decline in foreclosure actions over the last year as banks look toward short sales and loan modifications as alternatives to seizing homes.
“You will see a continued decline in defaults from regulator activity, new laws and from the economy,” said Dustin Hobbs, a spokesman for the California Mortgage Bankers Assn. “As long as the economy, and especially the housing market, continues to slowly heal itself, you will see fewer and fewer defaults.”
Madeline Schnapp, director of economic research for ForeclosureRadar, believes the low levels of foreclosures will continue.
“The plethora of anti-foreclosure laws have been very effective in reducing foreclosure activity to what you are seeing today,” she said.
We are being led to believe that people have stopped defaulting, and anyone in trouble is taking the friendlier short-sale exit.
But short-sales and REO sales have both dropped off substantially:
NSDCC Detached-Home Closed Sales Jan 1 – Feb 7th
|Year||Short-Sales||REO Sales||Non SS/REO|
Looking at this chart, it looks like the banks ramped up cancellations in September or everyone just started making their payments:
How can any of the “experts”, or the media look at the data and not wonder if lenders have deliberately stopped foreclosing? The banks have us right where they want us – feeling good about buying homes again, and the media is blindly pushing the new drug.