Foreclosures - Foreclosures Slow But Do Not Go

Foreclosures Slow But Do Not Go

March 11th, 2008

The previous year saw recording breaking foreclosures but this year will mark the turning point. In Harris, Montgomery and Fort Bend Counties the foreclosure postings jumped 21% from 2006. But the first two months of this year have shown a slight slowing down of the pace. However this trend is not uniform across the nation and hence predictions cannot be made on firm ground.

Rising number of divorces and increasing number of medical bills are also held responsible for the raging foreclosure crisis apart from the accusing finger pointing to the sub-prime fiasco as being the prime culprit. Borrowers were peddled loans they could hardly manage within a couple of years. Another reason are the innumerable number of mortgage frauds. Harris County officials in tandem with the FBI launched operations last year to nab the culprits.

Lenders hard pressed by increasing number of foreclosed houses weighing them down and public outcry coupled with pressure from the government are trying to work out solutions with borrowers so as to check the foreclosure tide. It is this that has given rise to hopes that the numbers will decrease from the second half of the current year. Barton Smith, of Houston University’s Institute for Regional Forecasting opines that rate cuts will not have much of an impact. In 1990 it had worked but today the rates are already so low that a further fall will lead to another fall in house prices. It is apprehended that real estate will continue to slide through this year. In Houston this trend might continue into the first few months of 2009 but it will be less than the rest of the nation.

The new subdivisions fringing Beltway were the centres of most of the 2007 foreclosures. Lax lending standards are being blamed for this. The shady documents during the time of the mortgage show the value of the land avoiding that of the building. But later when the tax man came collecting then the bills jumped to real figures and there is a hue and cry. The borrower was not prepared with the sudden dip into his pocket. When defaults creep in, the houses enter the rental market. Other bargains are snapped up by investors who are now finding the opportunity for profits in the rising demand for rented accommodation. There is no guarantee how long this summer is going to last.