It’s looking like the housing market is about to take another hit thanks to an increase in foreclosure activity by the banks. Foreclosures were largely put on hold through 2011 as the so-called “robosigning” scandal was sorted out, but now that five major banks have settled, they’re once again ramping up foreclosures.
Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.
Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28 percent in January.
More conclusive national data is not yet available. But watchdog group, 4closurefraud.org which helped uncover the “robo-signing” scandal, says it has turned up evidence of a large rise in new foreclosures between March 1 and 24 by three big banks in Palm Beach County in Florida, one of the states hit hardest by the housing crash.
Although foreclosure starts were 50 percent or more lower than for the same period in 2010, those begun by Deutsche Bank were up 47 percent from 2011. Those of Wells Fargo’s rose 68 percent and Bank of America’s, including BAC Home Loans Servicing, jumped nearly seven-fold — 251 starts versus 37 in the same period in 2011. Bank of America said it does not comment on data provided by other sources. Wells Fargo and Deutsche Bank did not comment.
Housing experts say localized warning signs of a new wave of foreclosure are likely to be replicated across much of the United States.
This new wave of foreclosures is driven less by risky mortgages and more by a tough economy. According to the Reuters article, a larger proportion of today’s foreclosures are Americans with ordinary mortgages that simply can’t keep up with their payments because of bad economic times.
Between the bad economy, large shadow inventory, and the latest round of foreclosures, there’s not a whole lot that points to higher national home prices in the near future. As I wrote about recently, home prices have already hit 10-year lows – and it looks like they could be headed lower.