ForeclosureForeclosure is the legal action taken to extinguish a home owner's right and interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds. in a property, so that the property can be sold in a foreclosure sale to satisfy a debt. news February 2012 from CoreLogic indicates a decrease in completed foreclosures versus January of this year. However the housing market crisis continues for many homeowners as indicated by the numbers of homeowners who are falling behind on their mortgageA Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home. loanA Loan is an amount of money that is lent to a borrower, who agrees to repay it plus interest. payments.
This week, housing market analytics provider CoreLogic released a report on foreclosures for the month of February 2012. The data indicates that there were approximately 65,000 completed foreclosures last month, down 1,000 from the same period in 2011, and significantly lower than the 71,000 completed foreclosures reported in January of this year.
Mark Fleming, chief economist for CoreLogic characterizes the statistics as hopeful, stating, “The pace of completed foreclosures is down slightly compared to January, running at an annualized pace of 670,000, but compares favorably to the pace of completed foreclosures in February a year ago. Even though the pace of completed foreclosures has slowed, the overall foreclosure inventory is decreasing because REO sales were up in February.”
I’m not sure I share Mr. Fleming’s enthusiasm. While the data contains the encouraging news that 60 major markets experienced a decrease in their foreclosure rates compared to a year ago, that’s not saying much. And it’s easier to remain concerned when you read CoreLogic’s warning that “approximately 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the foreclosure inventory as of February 2012 compared to 1.5 million, or 3.6 percent, in February 2011.” For all intents and purposes, the number of homeowners who have lost their properties, which now await sale, remains unchanged.
Perhaps even more disturbing: the percentage of homeowners that were 90 or more days late with their mortgage loan payments stood at 7.3 percent in February 2012, a slight rise from 7.2 percent in January. But what does this tell us? That too many homeowners are are still falling behind, creating continued risk for an additional glut of foreclosures. And more foreclosures in the housing market means lower-priced real estateReal Estate is land and anything permanently attached to it, such as buildings and improvements., which further erodes home value.
It’s hard to know where this cycle ends. While a number of economic indicators like job growth and the recent boom on the stock market do offer promise for a slow economic recovery, it’s hard to imagine its sustainability without a break in the housing market’s vicious circle.