Riverside Foreclosures Increase
Sept. 16 (Source: By Andrew Edwards, Inland Valley Daily Bulletin, Calif.) – Persistent unemployment and a renewal of banks taking actions against financially troubled homeowners may be a key reason behind a resurgence in foreclosure activity in August.If such a trend develops, it could add additional downward pressure on a housing market distinguished by falling prices, even as sales volumes rise.
“I think it’s a given, actually,” said Darryl Spellacy, owner of San Bernardino-based Spellacy and Associates Realtors. “Once again, the market is going to be flooded with a bunch of properties that are bank repos.”
A spike in the number of homes entering the foreclosure process may be the best evidence of a new wave of defaults and repossessions.
Nationwide, the number of homes nationally entering the opening stages of foreclosure jumped 33 percent from July to August, a spike even more pronounced in the Inland Empire and Los Angeles County.
The number of San Bernardino County homes receiving an initial foreclosure notice had an even higher month-to-month gain — 54.6 percent.
Los Angeles County recorded a nearly 60 percent jump in initial foreclosure fillings and Riverside County weathered a 62 percent month-to-month increase.
The national increase represents a nine-month high and the biggest monthly gain in four years. The spike signals banks are starting to take swifter action against homeowners, nearly a year after processing issues led to a sharp slowdown in foreclosures.
“This is really the first time we’ve seen a significant increase in the number of new foreclosure actions,” said Rick Sharga, a senior vice president at RealtyTrac, a foreclosure listing company.
“It’s still possible this is a blip, but I think it’s much more likely we’re seeing the beginning of a trend here.”
Riverside Foreclosures Increase
Foreclosure activity in San Bernardino, Los Angeles and Riverside counties is still well below 2010 levels. Throughout the year, RealtyTrac analysts have maintained that much of the slowdown was less the result of a healthier economy than banks slowing their foreclosure procedures in the aftermath of last year’s “robo-signing” scandal.
Robo-signing refers to the practice of banks initiating foreclosure proceedings without diligently observing paperwork requirements.
Many of the nation’s largest banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.
The process has also been held up by court delays in states where judges play a role in the foreclosure process, a possible settlement of government probes into the industry’s mortgage-lending practices, and lenders’ reluctance to take back properties amid slowing home sales.
Although procedural slowdowns may have helped some people stay in their houses longer than they would have otherwise been able to do, a weak economy has not helped anyone.
Whereas some people have entered foreclosure because they took on more debt than they can handle, others are now doing so because their incomes have shrunk or disappeared, said Adam Sands, program manager of the Housing Opportunities Collaborative of the Inland Empire.
“I think one observation that I’ve had from a lot of people is the primary driver of foreclosure is different than it used to be,” Sands said. “Now you’re seeing people are losing their houses due to job losses or income reductions or furloughs.”
Although a revival of foreclosures would keep prices down, some experts predict speedier processes could nonetheless lead to a healthier housing market. That reasoning is based on the idea the buyers would lose their fears that a “shadow inventory” of not-yet-foreclosed homes will suppress prices at an unknown point in the future.
There are about 3.7 million more homes in some stage of foreclosure now than there would be in a normal housing market, according to Citi analyst Josh Levin.
“This bloated foreclosure pipeline now presents the greatest obstacle to a housing market recovery,” Levin said in a client note this week.
Depending on one’s point of view, a healthier housing market is not necessarily one in which prices rebound and approach the highs of the mid-2000s.
Beacon Economics founder Christopher Thornberg, for example, has said that high housing prices have been a burden on the Golden State’s economy, since a high cost of living can make California less competitive than other states.
“The last thing we should be hoping for is higher housing prices,” Thornberg said in Monday conference call with the California Bankers Association.
But a frustrated Spellacy cautioned the flip-side to falling prices — rising affordability — can be a non-factor if people can get mortgages.
It’s Spellacy’s opinion that banks have now set lending requirements so high that “good, hard-working” people cannot get financing.
“It would be healthier if the banks were willing to make a loan,” he said.
The Associated Press contributed to this report.
(c)2011 the Inland Valley Daily Bulletin (Ontario, Calif.)
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A service of YellowBrix, Inc. Publication date: 2011-09-16
Source: By Andrew Edwards, Inland Valley Daily Bulletin, Calif.