WASHINGTON: Banks moved to repossess a record 2.87 million US homes in 2010 as the two-year-old mortgage crisis continued to weigh heavily on the economy, foreclosure specialist RealtyTrac said.
Foreclosures hit 2.23 per cent of all housing units in the country, or one out of 45, an increase from 2.21 per cent in 2009, RealtyTrac said in its 2010 report.
But the pace of foreclosures eased up in the fourth quarter, as banks ran into increasing legal challenges from owners angry that banks had repossessed their homes under a slipshod process.
December’s 257,747 foreclosure filings were 26 per cent lower than the year-earlier figure and two percent down month-to-month, the report said.
“Total properties receiving foreclosure filings would have easily exceeded three million in 2010 had it not been for the fourth quarter drop in foreclosure activity — triggered primarily by the continuing controversy surrounding foreclosure documentation and procedures that prompted many major lenders to temporarily halt some foreclosure proceedings,” RealtyTrac chief executive James Saccacio said in a statement.
Saccacio predicted that an estimated 250,000 foreclosures held up in the fourth quarter would be restarted in early 2011.
Foreclosure rates were highest in Nevada, Florida and Arizona, three sunbelt states which experienced huge real estate overbuilding and speculative investment during the 2002-2007 property boom.
In Nevada, one in 11 homes, or nine per cent, was hit with a foreclosure filing last year, according to RealtyTrac. Foreclosures in Nevada continued to increase in December counter to the national trend, rising 14 per cent from the year-earlier figure.
In Arizona foreclosures hit 5.7 per cent of all homes, and in Florida the figure was 5.5 per cent.
Arizona and Nevada have joined a number of states moving to stem the tide of repossessions by challenging lenders over how they managed and documented home loans during the boom period.
In December, both states filed lawsuits against Bank of America accusing it of defrauding cash-strapped homeowners amid the global economic downturn.
Source – AFP/fa
Food for thought: It is interesting to note that while in Singapore, many people are looking out for “fire sale or “distressed sale”. However, people are avoiding the same situation in US. Why is that so? Why don’t we trust this when applying the same concept in US properties, especially distress?
The common reason is probably the location. We tend to feel that we can’t “see” the property as it is out of sight. Of course, more work needs to be done instead of just that. We need to do our due diligence by studying the area, demographics, growth rate, employment rate, developmental activities, just to name a few. This should be the same if not similar way we do our due diligence for properties we invest in Singapore or any part of the world.
Many of us do not do this, either we do not know, or we ask the wrong person. The “out of sight” concern is often a perception issue. When we buy stocks or other paper asset class speculation, do we get to “see” what we are putting our money in? No, but we do not question that. But for properties, we must “see”. How ironical.
While it is good a fish a “fire sale” or a “distressed” property, we must also consider the location and general growth potential as not all is worth investing in.
Till then, Awesome!