The number of homes that received first time foreclosures notices rose 7% nationally in March, setting the stage for a surge in the properties being repossessed by lenders this year. This represents the third straight month increase this year and reflects a stepped-up effort by banks to take action against homeowners who fail to keep up with mortgage payments.
Foreclosure activity, as measured by the number of homes receiving foreclosure-related notices, slowed sharply in the fall of 2010 when claims surfaced that some banks and mortgage servicers were processing foreclosures without verifying documents.
Notice of default filings in Nevada have dropped dramatically since October when the robo-signing law went into effect requiring lenders to provide documentation of authority to foreclose. Nevada’s county recorders counted 346 NODs in January, compared with 5,019 in the same month a year ago.
Las Vegas housing analyst Dennis Smith of Home Builders Research said the local market is improving and moving in the right direction at this point of the recession. However, the recovery is being artificially stimulated by banks holding foreclosure inventory off the market, he said.
They’ve turned the housing inventory spigot to a trickle following legal issues and government backlash from the robo-signing scandal, Smith said. Ironically, they’ve created their own support mechanism to help the housing recovery.
“If this was a plan to help the housing industry, it worked,” the analyst said. “In our opinion, they have unintentionally helped themselves by holding back REOs, giving the market a chance to absorb some of the excess resale inventory.”
Rather than a large wave of bank-owned homes crashing onto the market at once, it’s likely the new crop of foreclosures will arrive in smaller waves throughout the year, Smith said.
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