SalemNews.com, Salem, MA

Business

August 11, 2012

Where are all the foreclosures?

(Continued)

He also notes the "conspiracy theories" floating around the real estate industry, that banks are purposefully holding back REO properties from the market. The theory goes that banks don't have to show the loss until the property actually sells. Keeping it on the books at an inflated price makes the bank's balance sheet better than it actually is.

Another theory is that banks are trying to control the flow of foreclosures to the market to keep prices on their current slow, steady rise.

'Malevolent masters'

"This is the stuff conspiracy theorists latch on to, always looking for an opportunity to portray the big banks as malevolent masters of the housing market," Blomquist wrote in a recent op-ed piece. "While many of the conspiracy theories involving the big banks are unfounded, there are some rational reasons why banks would want to intentionally restrict the supply of bank-owned properties available for sale."

Meanwhile, the July foreclosure numbers show foreclosure starts increased on a year-over-year basis in 27 states, led by Connecticut, New Jersey, Pennsylvania, Indiana and Massachusetts, which all happen to be judicial foreclosure states. In these states foreclosures were, in fact, put on hold while the settlement was worked out with the five major lenders. Those cases are now moving forward.

California posted the nation’s highest state foreclosure rate in July despite an 11 percent decrease in foreclosure activity from the previous month and a 25 percent drop from July 2011. One in every 325 California housing units had a foreclosure filing during the month, more than twice the national average.

The state where the foreclosure problem is almost non-existent is North Dakota, where the oil and gas boom has transformed the economy. In July, there were only three foreclosure filings in the entire state, for a rate of one in 105,833 housing units.

Story provided by ConsumerAffairs.

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