What’s Happening with Foreclosures?

By Joel Persinger
YourRealEstateDude.com
February 17, 2009

Not long ago, the question I was most often asked was, “How are the interest rates today.” But now, the burning question on most people’s lips appears to be some version of, “What’s happening with foreclosures?” Unfortunately, a good answer is difficult to come by.

Over the past year or two, healthy banks have been gobbling up sick ones and have been trying to deal with the financial illnesses that the sick banks brought into the deals. A prime example of this is the purchase of Countrywide Home Loans by Bank of America. Since the day the deal was announced, trying to work with Countrywide to resolve the problems of distressed homeowners in “pre-foreclosure” has been a nightmare. In every way, Countrywide has lived out the old saying that, “The right hand doesn’t know what the left hand is doing.” This is not to single out Countrywide. Just about every recent purchase of a distressed bank has yielded a similar result. Nevertheless, this kind of thing can make figuring out the real estate and lending markets quite challenging for both real estate professionals and homeowner.

This past week, ForeclosureRadar.com released its California Foreclosure Report for January 2009. The report states, in part, “January brought an unexpected, across the board drop, in the total Notices of Default, Notices of Trustee Sale, and sales at auction, not only from the prior month, but year over year as well. Even after accounting for the fact that January had two fewer days than December, only properties sold at auction saw a slight increase of 3.4 percent. Analyzing the data at the lender level, it appears these drops can be primarily attributed to the significant changes taking place among the Country’s major lending institutions. Wells Fargo, with its recent acquisition of Wachovia, saw a drop in Notice of Default filings of 46 percent, while JP Morgan, which acquired Washington Mutual, saw a drop of 49 percent. Bank of America, which earlier acquired Countrywide, saw a significant 281 percent increase in filings, though still below the levels Countrywide experienced in the second quarter of 2008”

At first glance this appears to be good news. Hey… foreclosures are down! But, just when you thought it was safe to go back in the water, the report continues by stating, “Given the significant integration issues faced by most major lenders today, it would be irresponsible to draw any conclusions about market direction from current foreclosure numbers.” In plain English this means that since the lending institutions have no idea what their doing and since their proverbial right hands have no idea what their left hands are doing, nobody really knows what direction the market will take and ForeclosureRadar.com’s California Foreclosure Report, while interesting reading, means absolutely nothing.

So where does that leave you and me? Currently, foreclosures are down, but tomorrow they may be up. Who knows? What we do know is this: prices are down and still decreasing. Interest rates are low and loans are available to those who can actually repay them. Sellers are having a tough time and buyers are finding deals. Basically, it continues to be a buyer’s market. If you are a qualified buyer, you should be buying.