The nation’s lending institutions repossessed more than 67,000 American homes in July according to RealtyTrac. 67,829 bank repossessions took place last month, a 4% drop versus the previous month and a decline of 35% when compared to July of last year. Although foreclosure filings dropped in July, more than 212,000 homes received a foreclosure notice of some sort last month. Foreclosure filings have dropped in year-over-year comparisons for each of the last 10 months.
Why the drop in foreclosure filings when it’s obvious that millions of American homeowners are underwater in their homes? The country’s lenders are proceeding much more cautiously these days as they are under intense scrutiny by regulators and lawmakers in the wake of the “robo-signing” scandal. Some speculate that one or more of the country’s leading mortgage lenders will cease to exist by the end of the year as a result of the negligent and/or criminal behavior banks engaged in last year when processing foreclosures.
Many homes which, under ordinary circumstances, would have already been foreclosed upon and repossessed by banks have been delayed as a result of the slower pace of foreclosure proceedings. This so-called “shadow inventory” of distressed properties destined for sale at reduced prices is likely to continue to depress prices and contribute to the wariness of potential home buyers. Many prospective homeowners will wait until prices begin to rise again before they are comfortable re-entering the housing market.
Investors Buying Foreclosures at "Wholesale" Prices
By then it may be too late. Real estate investors are buying foreclosures and bank-owned homes with gusto. In many of the more distressed housing markets across the country, all-cash transactions involving investors purchasing foreclosures account for more than half of all sales. More than half! Aspirational property owners need to act quickly before investors snap up all of the great bargains out there at “wholesale” prices. Buyers who wait too long will have to pay retail, and nobody likes to do that!
