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What is Foreclosure?

27th May 2011
By karen in Real Estate Law
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The process of foreclosure may seem to hard to grasp for people who do not work inside the industry of banking; however, it is simply quite similar to a tube. People are placed inside of tubes when they are ninety days late. And, if they are lucky, they may make it out of the other tube’s end after six months.

This may seem like a smart analogy. However, it does not exactly explain how more and more property owners in the area of Phoenix have entered this tube every month instead of coming out of the other end. This has been happening for the past few years.

Right now, this system comes with almost fifty thousand foreclosures that are “pending”; two years ago, the number only stood at around two thousand. All this stems from the historical analysis done by the Information Market, which is a research firm in Phoenix.

The majority of experts are waiting for foreclosures that are pending to rise even more before it levels off anytime within the next year. A lot of speculation has gone on among experts real estate regarding reasons for apparent house and condominium backlog that is heading towards foreclosure, as well.

There happens to be a widespread belief which states that banks limit the home foreclosure flow onto the actual market on purpose, which then aids in preventing home prices from going down even more, though this could also prolong the overall market's recovery in the long run.

On that same note, several say that lenders are merely dragging their heels to repossess and sell extravagant homes, as well as commercial properties (though to a lower extent); this would include raw land since the overall demand for top-notch real estate is still too low and since selling huge assets off at prices that have been significantly reduced could simply cause several smaller banks to completely fail.

Lenders have kept rather quiet regarding their strategies related on their work in pending foreclosures. This has simply fueled even more different theories. However, these theories tend to give banks far too much credit.

The truth it, with such a huge home portfolio to look through, they simply do not have any time to organize them and focus on one at a time.

Foreclosure totals per month have significantly risen and fallen again several times ever since the market of housing peaked around three years ago, though the regular trend has been going up.

However, the amount of foreclosures that are pending, as well as properties that are on notice for trustee sales but haven’t been sold yet, has significantly risen without any exceptions since 2006. This year, it has risen significantly per month. According to such date, the actual foreclosures that have gone through within the past three years have totaled to 73,000.

Several foreclosures in Valley may take much longer than usual to go from notice to sale since borrowers always attempt to figure out loan modification agreements with lenders every now and then.

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