Tuesday, June 29, 2010

The Foreclosure Backlog dips a bit in May

The home-foreclosure crisis will be with us for years, but here’s a small sign of progress: The number of home loans in the foreclosure process may have peaked, according to Barclays Capital in New York.

In the firm’s latest Securitized Products Weekly, analyst Robert Tayon estimates that the number of homes in foreclosure was down 2.6% in April from March’s level, to 1.95 million. The number of newly delinquent loans is finally declining, and loan servicers are managing to complete more foreclosures.

The foreclosure process often takes a year or two. That’s partly because of time-consuming efforts to avert foreclosures wherever possible, mandated by federal and state governments. It’s also partly because loan servicers, typically bureaucratic and understaffed, have been slow to work through their backlogs of distressed loans. But eventually these situations get resolved.

Though the number of homes in the foreclosure process has fallen a bit, the number of foreclosed homes owned by lenders and mortgage investors continues to grow, Barclays says. In April, it estimates, the total number of these REO (or “real estate owned”) homes was 526,000, up from 522,000 in March. Barclays believes the REO supply will peak in August 2011 at 545,000 before starting to gradually diminish. That means foreclosed homes will continue to weigh on house prices for at least the next couple of years in areas with heavy concentrations of distressed loans.

Information provided by Donna Antonucci
Prudential  Castle Point Realty
203 Washington St.
Hoboken, NJ  07030

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