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Foreclosures Coming Onto the Market Still Under Tight Control

(9/23/10)

In the month of August, mortgage lenders and servicers took over more homes than at any time since the crisis began, totaling over 95,000 units. This back log of foreclosures in the pipeline continues to be tightly micro-managed by both servicers and lenders. In a deliberate effort to avoid a rapid drop in home prices, which a wave of properties released for sale at auction would surely bring, properties are instead being sold at a tightly controlled pace. As a case in point, it appears that even seriously delinquent loans are moving through the foreclosure process at an extremely slow pace. Lenders have been taking a record 324 days to complete the entire foreclosure process beginning with filing the notice of default to completing the foreclosure sale. More troubling, lenders actually took back more properties at auction in the month of August than they were able to sell, resulting in an even greater expansion of foreclosure property inventory. For nine continuous months, a number of foreclosures have been increasing on a year-over-year basis, reflecting that this process is far from over and it is difficult to gage when it might ease.

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