Experts say that the recently approved $26 billion foreclosure settlement will pave the way to the eventual increase in new foreclosure activities.
Even as the number of U.S. foreclosure filings in the 1st quarter of 2012 has been the lowest since the 4th quarter of 2007, this does not mean that foreclosures are easing up, this according to RealtyTrac.
RealtyTrac reports that in the 1st first quarter of this year, the total foreclosure filings totaled to 527,740, the lowest quarterly total since the 4th quarter of 2007.
Brandon Moore, chief executive officer of RealtyTrac, says in a statement, “The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated.”
“There are hairline cracks in the dam …. The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short sale activity,” the chief executive officer of RealtyTrac continues.
Early this month, Federal Judge Rosemary Collyer approved the $26 billion settlement between the nation’s five biggest mortgage lenders and 49 state general attorneys over the issue of foreclosure processing abuses.
The involved five biggest mortgage lenders are Bank of America, Citibank, JPMorgan Chase, Wells Fargo and Ally Financial (formerly GMAC).
While the approved $26 billion settlement clears the way for banks to compensate homeowners that were impacted with the foreclosure processing abuses, also known as robo-signing; the settlement also clears the way for more foreclosure activities.
Eric Higgins, a professor of business at Kansas State University, told CNN Money that mortgage lenders pause the foreclosure button since the fall of 2010 following the robo-signing scandal.
Rick Sharga, executive vice president for real estate investment company, Carrington Holdings, told CNN Money, “Perhaps a million foreclosures could have been pursued last year but weren’t.”
With the approved $26 billion settlement, Sharga says, “We’re going to see an increase in the speed of foreclosures and a higher number of foreclosure starts.”
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