Feb 14, 2011
Foreclosures plummet as banks review procedures
14 Feb 2011
Posted by Andrew Kantor
Forced to ensure they comply with the law, banks and other mortgage lenders have slowed their foreclosure processes, resulting in a 17% decrease in foreclosures in January compared to a year ago.
While on first blush a decrease in foreclosures may seem like a good thing, as RealtyTrac CEO James Saccacio put it, it’s "less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing."
(Oddly, HousingWire makes light of the issue. "Late in 2010," it wrote, "major servicers began reviews of documentation and processes when employees were found to be misfiling affidavits in several states." That "misfiling," according to various court documents, included filing false affidavits, forging signatures, and creating documents out of thin air.)
The bottom line is that having to make sure they obey the law has caused a backlog. Once their procedures past muster, lenders will ramp up their foreclosures again, and the numbers will likely fall back in line. ( Bank of America, for example, says it will complete the review of its procedures something in the first quarter of this year.)
For background, CNN has a nice piece explaining the whole mortgage-fraud thing.