National Decline in Foreclosures May Help Struggling Homeowners

According to data from RealtyTrac, a company that markets foreclosed properties online, 84 percent of the nation’s metro areas saw a decline in home foreclosures during the first half of 2011. The company also reported that the nation-wide foreclosure rate has dropped 29 percent in the past 12 months.
Industry analysts attribute much of the slowdown in foreclosures to the glut of foreclosed properties on which lenders already foreclosed and cannot sell, not to any dramatic turnaround in the country’s housing market. Additionally, lenders are being more cautious in how they proceed in foreclosing on homes after the 2010 “robo-signing” scandal over how lenders were having attorneys process foreclosure documents without actually verifying the contents of the documents was accurate – and essentially committing foreclosure fraud.
While this may signal poor news for the nation’s economy, lenders being less anxious to foreclose property may help homeowners who are struggling to make their mortgage payments and trying to avoid foreclosure. With a backlog of properties already in lenders’ possession, lenders are less likely to institute new foreclosure proceedings on mortgagees who are behind in payments, giving people extra time to try to get back on track financially before they are in serious danger of losing their homes.
Additionally, lenders may be more open to negotiating a loan modification with more favorable terms for the homeowner so that he or she can make the monthly payments. Finally, lenders might approve more short sales in an effort to avoid the whole foreclosure process and ensure that the lender does not have yet another property to try to sell.
While the news that foreclosure rate has dropped only because lenders have already foreclosed on so many other homes may be disappointing for those looking for signs of recovery in the nation’s economy, this may end up being beneficial for some people who are suffering the brunt of the poor economy and are in danger of losing their homes.