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Foreclosures Decline by 29%

Written by Gary North on March 14, 2013

The foreclosure crisis is behind us. That is the opinion of the head of RealtyTrac, which monitors this market.

Foreclosures and repossessions are now at the 2007 rate.

Banks still hold millions of homes off the market. They have decided not to foreclose. They are going to let people live in their homes, even though the owners have ceased paying on their mortgages. The people who stopped paying years ago are the big winners.

The banks have to spend too much money in foreclosing. They are not pressured by bank regulators to report dead loans as dead. These dead loans are ignored. The banks lose money, but no one cares.

People who don’t pay on their mortgages get to live almost rent-free. They have to pay property taxes and fire insurance, but that’s all.

The housing bubble gave home owners in tight conditions a way to cut their expenses. Those who did this know that they can be evicted, but they seem to be getting away with this.

The average Joe is underwater on his mortgage. He owes more than his house is worth. He keeps paying. Yet the system rewards the unaverage Joe who just stops paying off the mortgage.

This conceals the huge losses the lenders have sustained. But the bank regulators fear a replay of 2008. It’s easier to turn a blind eye to the banks’ balance sheets. “Sure it’s a good loan. It’s just a little behind.” Like three years.

Still, it’s good news for home owners. Until the next recession, home ownership has stabilized. With foreclosures down, the buyers will have to bid up prices.

I recommend John Schaub’s approach to buying homes: www.JohnSchaub.com.

Continue Reading on www.bloomberg.com

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4 thoughts on “Foreclosures Decline by 29%

  1. nevertoolate says:

    so what happens if one of these"a little behind-like three years" tries to sell their property? Sorry but this is just plain wrong and unfair to those who are continuing to struggle but still choose to pay their mortgage as agreed.

  2. Jack Mieoph says:

    why would someone not paying their mortgage bother paying their insurance?

  3. "Banks still hold millions of homes off the market. They have decided not to foreclose. They are going to let people live in their homes, even though the owners have ceased paying on their mortgages."

    One important thing is many Americans have learned to challenge foreclosure because the chain of custody was broken through the fraudulent actions of the banks and mortgage companies. Most of the time the party moving to foreclose is not the holder in due course of the title. These toxic mortgages were fraudulently rated as AAA investments, sold and re-sold to "froth up" the market so investors could make quick killings.

    It is simplistic to say that everyone with an underwater mortgage is a "deadbeat" or lied to get a loan. Millions of Americans bought homes thinking they would have viable jobs into the future with which to pay back those notes.

    Then Congress and the president rescued the criminals at the top of the pyramid who used the bailouts to further line their pockets and offshore US industries.

  4. Paul Brown says:

    It satisfies the bank in that the home is covered for fire and that the bank will get the money and the homeowner will then be on the street and the bank won't have to pay anything to get them out. Way cheaper for the bank.