More Inventory to Hit the Market

New Wave of Foreclosures Expected

Friday, March 16, 2012 — 

The number of homes entering foreclosure dropped in February, but a new up-turn may soon be on its way. The reason? 

 

The $26 billion settlement between 5 major banks and state attorneys general over past foreclosure practices.

 The agreement clarifies how foreclosures must be handled, and that is expected to enable banks to speed up their processing, putting many new delinquent homeowners into the foreclosure process.

 Cases could go forward after sitting in limbo for months — even years — with their delinquent owners squatting on the properties.

The banks involved are Bank of America, (BAC, Fortune 500) JPMorgan Chase (JPM, Fortune 500), Citibank (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial.

 “The pig is starting to move through the python,” said Daren Blomquist, director of marketing for RealtyTrac, which released its foreclosure report for February on Thursday.

Homeowners on the mortgage settlement: ‘This stinks’

Though filings for the month were down 8%, there were indications that the foreclosure pipeline was beginning to unclog.

Foreclosures had dropped much more in January — 19%. And 21 states posted increases in filings in February, the most since November 2010. Plus, half of the nation’s 20 largest metro areas reported increases as well, led by Tampa, Fla. (up 64%) and Miami (53%).

 “February’s numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed,” said Brandon Moore, CEO of RealtyTrac.

That Florida cities led the charge is a telling sign: The state was one of the states hardest hit by foreclosures, and it was also most affected when banks slowed the foreclosure process after the robo-signing scandal in fall 2010.

 Now, however, the banks appear to have resumed pressing the cases.