The Fall of Foreclosure Rates

 

Home foreclosure rates and repossessions have fallen again to a rate that hasn't been seen since 2007. All defaults and filings were down 33 percent, according to online marketer RealtyTrac. The numbers add up to 804,000 repossessions in 2014 with one in every sixty-nine homes had a foreclosure. That's down from 2010 when over a million homes were taken back from the bank.

While the decline sounds great for the market, keeping the prices for homes low, it's all the result of a robo-signing scandal. Banks took as long as a year to sign foreclosure paperwork, creating a massive backlog, forcing the time it took to care of housing business skyrocketed.

"Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year," said RealtyTrac CEO Brandon Moore. He also shared that all signs were pointing to the fact that lenders were finally getting around to the backlogs of paperwork early last year.

The government did their part in helping the prices fall by introducing HARP, the Home Affordable Refinance Program, to make it simpler for people to refinance their homes if it was worth less now than they owe on it. Together with HAMP, the Home Affordable Modification program, these programs have allowed nearly 6 million home modifications according to U.S. Department of Housing and Urban Development.

"Programs like HAMP and HARP have definitely made a dent in the foreclosure problem," said Moore "However, they are certainly not living up to their billing of preventing several million foreclosures. In addition, many [HAMP] homeowners fall back into foreclosure later on."

Despite all these good factors weighing in to help homeowners, there were still plenty of issues for them to be concerned about. Once home prices fell, along with it went home equity, which was a safety net for people if they needed a little extra cash. With no extra help if they got into trouble, the situation became even more dire for homeowners.

There are a lot of places that had it worst than others. Certain areas called "bubble states" exist who remained a hot bed of foreclosure activity. These are areas that saw the prices of homes explode beyond their worth doing the housing boom of the mid-2000s. States like Nevada, Arizona, and California had the highest three foreclosure rates with as many as one out of every sixteen homes getting a default notice. Florida, Georgia, Utah, and Michigan are the others.

Gennady Barsky is responsiblefor worldwide multi-currency corporate finance including treasury, cash management, financial planning, and investor relations.