The headline foreclosure news in October was the suspension of foreclosures by a handful of lenders, after certain procedures were called into question. By now, we all know the term ‘Robo-Signing’. While the announcements initially focused on 23 judicial foreclosure states outside of California, Ally (GMAC), PNC and Bank of America all later announced that they would be suspending foreclosures nationally. The week after the announcements, we saw evidence of those suspensions on Tuesday, October 12; after the Monday holiday. Ally restarted foreclosures just a week later on October 18; but neither Bank of America nor PNC have resumed foreclosure sales as of November 15th.
Foreclosure filings were less impacted by the announced suspensions. Filings by Bank of America dropped slightly just after their announcement, but began picking up the following week. PNC appears to have largely stopped new filings, but they typically represent less than 2 percent of filings, so their impact was minimal. Despite the limited impact of announced suspensions, Notices of Default filings were generally down.
"Despite a short-term impact to foreclosure sales, the latest foreclosure scandal will likely lead to little more than a new scam perpetrated on those who have already lost their home," says Sean O'Toole, CEO and Founder of ForeclosureRadar.com. "Much like the cottage industry of loan modification consultants that took up-front fees and provided little in return, we are now seeing consultants promising to overturn foreclosure sales, despite any experience in actually doing so."
Preforeclosure inventories dropped 11.8 percent in October from the prior month, largely thanks to a 16.8 percent drop in Notice of Default filings. Foreclosure suspensions led to a 29.9 percent decline in foreclosure sales that went Back to Bank (REO), and a 26.4 percent decline in those Sold to 3rd Parties. Despite the significant decline in new Bank Owned (REO) properties, Bank Owned (REO) inventories actually rose, as REO resales continued to slow.
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