Repo Homes Will Rise Next Year despite Eight-Percent Drop

Repo homes will rise in number next year despite the eight-percent decline in foreclosure filings across the U.S. in November, according to analysts working for a California-based foreclosure tracking firm.

In November, total foreclosure filings throughout the country fell by eight percent to around 307,000, the fourth straight month that total foreclosure postings dropped after reaching the highest level of 360,000 filings in July. The November figure also marked the lowest monthly total since February.

Another positive finding was the drop in foreclosure filings in Nevada, the second straight month that filings fell in the state. Las Vegas, which previously topped metro area foreclosure rate charts, also showed a significant improvement, falling to fifth place in ranking in November.

However, mortgage and housing analysts contend that the reported consecutive drops in foreclosure filings are artificial and that they do not show the real foreclosure situation. They reiterate that federal and state loan modification and mediation programs, in addition to the efforts of banks and servicers to control the number of lower-priced repo homes reaching the market, have been holding back foreclosure numbers.

Foreclosure experts believe that there will be another wave of foreclosure postings next year as the true results of loan modifications appear in 2010. Mortgage analysts said that falling home values, tight credit and unemployment will push more homeowners into foreclosure, including those whose mortgages were successfully modified into lower monthly payments.

In Nevada, the pace of foreclosure slowed down because the state launched a mandatory mediation scheme in which lenders must meet with troubled homeowners and work out an affordable repayment scheme. As state officials hoped, the mediation scheme will prevent a number of homes from getting foreclosed, but analysts who have seen the performance of modified loans in other states believe that many of these mortgages will ultimately go into foreclosure.

William Campbell, a property consultant and head of Arkansas-based RPC Group, said that out of about 7 million distressed home loans in the country during the current crisis, 3.9 million loans will fall into foreclosure. He explained that the loan modification workouts will only delay foreclosure for a lot of homeowners.

Another reason for the expected rise in foreclosures next year is the country’s bleak unemployment situation. In October, the jobless rate hit 10.2 percent, its highest level in 26 years. With a sharp rise from 9.8 percent in September and with another net job loss of 190,000, a lot of homeowners will not be able to save their houses from becoming repo homes.

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