For the first quarter of 2013, the year-over-year figures for foreclosure-related activities decreased by 23 percent. This is the lowest level of initial notices of default, foreclosures auction and banks taking title to homes since the second quarter in 2007.
To pout thing into perspective, the California-based foreclosure tracking firm RealtyTrac reports that banks foreclosed on 44,000 in March. During the month of September 2010, more than 100,000 home owners lost their homes to foreclosure. The firm’s vice –president Daren Blomquist said "We're getting back to normal and will be there by next year."
Opting For Short Sales
More struggling home owners with underwater mortgages choose to enter short sales transactions. A short sale refers to an offer that falls below the balance owed on the mortgage. The bank forgives the borrower the difference and must approve short sale transactions.
Some institutions like Citibank, Bank of America, Ally Financial, Wells Fargo and JP Morgan Chase to meet their obligations under the $26 billion mortgage settlement reached last year. In addition, more lenders have chosen to approve these deals at a higher rate because it’s a less expensive alternative to foreclosing on homes and the associated costs.
Mortgage Refinance Plans
The Home Affordable Modification Program (HAMP) and Home Affordable Refinance Plan (HARP) must receive some of the credit for positively affecting the foreclosure rate. The HAMP mortgage plan, which many housing advocates consider a failure, resulted in loan modifications for less than 1 million homeowners.
HAMP expires December 31, 2013.
The Acting Director Edward J. DeMarco of the Federal Housing Finance Agency (FHFA) reports that more than 2 million Americans refinanced their mortgages. This remains far short of the 4.5 million plus homeowners that were supposed to receive assistance when the program was originally announced in early 2009.
The FHFA plans to begin an aggressive nationwide campaign to market the HARP program to homeowners. The initiative will educate consumers about the program and the eligibility requirements. The intent of the campaign is to get homeowners who have underwater home loans to take steps to evaluate available options before the HARP mortgage program expires.
The program which was schedule to end on December 31, 2013 has been extended to December 2015.
Several older areas of the nation have a majority of the foreclosure activities. This is the case in three Illinois cities-- Joliet, Rockford and Chicago. The five state with the highest number of foreclosed homes compared to home mortgages are: Florida - 9.9 percent, New Jersey - 7.2 percent, New York - 5 percent, Nevada - 4.6 percent and Illinois - 4.5 percent.
Blomquist believe difference dynamics are at play for the increased foreclosure filings in these regions of the country. “During the housing bust, people were forced to default because of plunging home prices and unaffordable mortgage terms,” said Blomquist. He states that most homeowners facing foreclosure at this time have more to do with job layoffs or personal circumstances like illness or divorce.
Home price appreciation, which increased more than 8 percent in January compared to 2012, will help reduced short sales and ultimately foreclosures will also decrease, said Blomquist. Lawrence Yun, the senior economist for the National Association of Realtors predicts homes prices increase will approach double-digits for 2013.