By Yinka Kolawole
A total of 288,345 properties were lost to foreclosure in the July_September quarter, according to data released over the weekend by RealtyTrac Inc., a foreclosure listing service. That’s up from nearly 270,000 in the second quarter, the previous high point in the firm’s records dating back to 2005.
There are over indications that many of the foreclosures may be challenged in court later because of allegations that banks evicted people without reading the documents.
Banks have seized more than 816,000 homes through the first nine months of the year and had been on pace to seize 1.2 million by the end of 2010. But fewer are expected now that several major lenders have suspended foreclosures and sales of repossessed homes until they can sort out the foreclosure_documents mess.
Rick Sharga, a senior vice president at RealtyTrac, noted that legal challenges are likely.
But he doubts many will be successful in overturning foreclosures. He said he expects foreclosures to resume and predicts about 1 million homes will be taken back this year. “The bottom line is not that those properties won’t be repossessed. They simply won’t be repossessed as quickly. We’re simply delaying the inevitable,” he said.
Experts say if lenders resume foreclosures in a couple of months or so, the delay will amount to a temporary lull followed by a spike in home repossessions early next year. But if the crisis drags on for months and more lenders stop seizing homes, the foreclosure delays could last well into next year. That could have a severe effect on home sales and prices.
A freeze in foreclosure sales between now and December by a majority of lenders could amount to removing 30 percent of all home sales for that period, Sharga suggests. “You would virtually guarantee that tens of thousands of properties would miss going to market in time for the spring, which is the peak buying season for real estate,” Sharga said.