Are Foreclosures Really Dropping Off?

In the exuberance to proclaim the economy "healed" "recovered" "rebounding" or "looking up" some in the media are not revealing the whole story when it comes to Foreclosures. Stories can always be told two ways.  For example if this month 40 house sold and last month only 20 had sold it could be truthfully reported that HOME SALES Doubled!  The reality behind that may be that 40 is the average and 20 was just a terrible month.

When it comes to foreclosures the reporting that they are down is not totally untrue.  Realty Trac (a real estate data company) reported that January 2011 Foreclosures where down 17% over January 2010.   Sounds good, you might think that we are seeing major improvement. The other part of that data is that this is still a 1% increase in foreclosures over December 2010 nation wide and locally it is 3%.  That is up not down.

So to dig a little deeper it is important to note what is happening behind the scenes.  That is that the banks are mired in additional government restrictions and internal policy changes that they have implemented in light of some high profile problems.  In other words, many of the foreclosures are simply being stalled and pushed back on the calendar.  Policies from the administration are causing banks to give more consideration to modifying loans and making sure everything is in order before they actually do foreclose.  Also, because home prices are not rebounding the number of homeowner who are upside down in their homes remains high.  The longer that this remains the case the more problematic it becomes.  Peoples lives changes, homes need to be sold, people have to move, downsize or up-size their living situations.  Underwater homes can't be sold except in a short sale situation.

Are things improving? Yes, there are some signs that things are getting a little better.  There is reason to hope.  Even the slowdown in foreclosure actions is a good thing in its own way.  In a fragile economy, the last thing we want to do is put someone out of their home who could, with a little help, hold on to it.  At the same time we don't want to get too exuberant over statistics that are not fully understood or explained in context.  See the whole story at CNN money.

Search for Foreclosed properties in the Palm Springs CA area