How will foreclosures play out this holiday season?by Tim Manni
When the robo-signing scandal first came out in the open, I assumed most of the foreclosure filings would be reviewed and we’d realize that most were legitimate and we’d quickly go back to normal. As time wears on, the market distortions have become far more apparent.
The latest foreclosure numbers which came in this week showed a decline in foreclosure filings for the month of October. Good news, right? Not exactly. The only reason for the decrease was due to the foreclosure moratorium that took place after the robo-signing scandal became known.
So my question is, “How will the robo-signing scandal and the moratorium affect the housing market this holiday season?
The answer: We should expect an increase of foreclosures to hit the market this month and next as the nation’s largest lenders have resumed foreclosures.
“Think of the moratorium as a dam that was placed in a river,” explains HSH VP Keith Gumbinger. “Once you remove that dam, the water which has built up behind the dam will come rushing down the river and spill over the banks.”
Does this mean housing is in for a dark and gloomy holiday season? It’s very likely because whenever this glut of foreclosures does enter the market, and aside from more people on the street, it’s going to put additional downward pressure on home prices — another kick in the teeth for housing.
Another holiday moratorium?
Will the bump in the properties hitting the market be delayed until January? Let’s not forget about last year. Citigroup and Fannie and Freddie opted not to play the Grinch last December, enacting a moratorium that had everything to do with sympathy, not because their employees failed to follow proper procedure:
“We want our borrowers to have a much less stressful time, to spend their time with their families during the holidays as opposed to worrying about their homes,” Sanjiv Das, head of [Citi's] mortgage division, said in an interview.
Given the fact that last December’s holiday moratorium wasn’t announced until the middle of the month, and given that a few-week delay in foreclosure filings only delays upcoming evictions, we’re in for a wave of new foreclosures — whether that happens in December of January, it’s coming.