The Real Estate Bloggers

August Mortgage Default Warnings Soar as New Wave Of Foreclosures Are About to Happen

Posted: 15 Sep 2011 09:26 AM PDT

Money_dn_drain The backlog of foreclosures is breaking free and the real estate markets are expecting the full force of this deluge to affect prices and demand.

America’s banks have been very tentative in foreclosing on homes since last fall. Between fears of class action lawsuits over robo-signing the foreclosure documents and government investigations, the banks have kept their heads down.

Now that these storms have for the most part past, the 3.7 million homes that could be foreclosed upon may be in trouble. And you did read that right, there are nearly 4 million homes in the country that are behind enough on their mortgages that they can be foreclosed upon.

So for those looking for a recovery in the real estate market, there may be a bit longer of a wait.

The number of U.S. homes that received an initial default notice — the first step in the foreclosure process — jumped 33 percent in August from July, foreclosure listing firm RealtyTrac Inc. said Thursday.

The increase represents a nine-month high and the biggest monthly gain in four years. The spike signals banks are starting to take swifter action against homeowners, nearly a year after processing issues led to a sharp slowdown in foreclosures.

“This is really the first time we’ve seen a significant increase in the number of new foreclosure actions,” said Rick Sharga, a senior vice president at RealtyTrac. “It’s still possible this is a blip, but I think it’s much more likely we’re seeing the beginning of a trend here.”

Foreclosure activity began to slow last fall after problems surfaced with the way many lenders were handling foreclosure paperwork, namely shoddy mortgage paperwork comprising several shortcuts known collectively as robo-signing. via Yahoo.com

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August Mortgage Default Warnings Soar as New Wave Of Foreclosures Are About to Happen