From the current news one has to wonder if the foreclosure crisis is going to grow worse before in grows better.
According to RealtyTrac Inc. lenders took over 102,134 properties in foreclosures in September 2010, which makes last month the highest monthly total of foreclosure sales, since RealtyTrac Inc, began tracking the data in 2005. Furthermore, August had also broken the previously standing record for foreclosure sales. Sales of properties in foreclosure now amount to approximately one third of U.S. transactions, and this is despite the fact that mortgage companies have realized that they are creating a glut in the market and slowed down the foreclosure procedure in many cases.
Meanwhile on Wednesday October 14, 2010 the attorneys general of all 50 states announced plans to investigate whether banks and mortgage companies have properly handled foreclosures sales on thousands of homes. This investigation has more potential consequences though than merely causing further headaches to the mortgage industry. If these foreclosures sales were done improperly the next question to arise will be can the sales be set aside? And if the answer is yes thousands of buyers of foreclosed homes may not have valid title to the property. Title companies are starting to show reluctance to issue title policies on foreclosed properties, and the uncertainly in this huge portion of the real estate market is thought to be responsible for a large midday dip in the stock market on Wednesday.
Unfortunately, this uncertainty in the foreclosure process can only serve to weaken the housing recovery, as many home buyers and investors will no doubt become leery about purchasing properties that have been through the foreclosure process, and with new potential losses for the mortgage industry the lenders might grow even more reluctant to issue new mortgages.
See Stopping Home Foreclosures
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