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.