Foreclosures on Rise Again, More Trouble for Home Values?
Foreclosure starts are reversing course and are back on the rise, which is expected to continue to put downward pressure on home prices, a new report released Monday from Fitch Ratings says. With a jump in the inventory of distressed homes, Fitch predicts home prices to dive another 10 percent nationally before stabilizing.
Foreclosures on delinquent loans have nearly doubled compared to this time last year, when a robo-signing scandal temporarily brought foreclosures to a standstill in many parts of the country.
According to Fitch’s most recent report, foreclosure starts on severely delinquent loans have jumped more than 10 percent in a month. In fact, the spike is nearing the average rate of 14 percent that was seen between 2000 and 2010, according to Fitch’s RMBS (residential mortgage-backed security) Performance Metric.
Foreclosure initiation rates on borrowers who haven’t made a mortgage payment in more than six months also have nearly doubled in the last five months.
“Rising foreclosure start rates are likely a sign that servicers are playing catch-up on actions that have been delayed over the past year,” Diane Pendley, Fitch managing director, said in the report. “Mortgage servicers now generally feel they have implemented the corrective actions that they determined were needed.”
Source: Fitch Ratings; “Rising Foreclosure Rates to Impact Home Prices, Fitch Says,” HousingWire (Nov. 7, 2011); and “Fitch Ratings Says Foreclosure Rate of 10 Percent is Almost Twice as High as Last Year’s Level,” Associated Press (Nov. 7, 2011)