An interesting take on recent foreclosure activity from Diana Olick:
As regulators and law enforcers battle this out, banks are ramping up foreclosures with increasing speed. A new report from ForeclosureRadar, which measures some of the most distressed markets out West, shows a big jump in March foreclosure sales, the final stage of foreclosure. Total foreclosure sales were up 35 percent in California from February. In Arizona, sales back to the bank (REO) were up over 60 percent and in Nevada bank repo’s were up 160 percent.
Granted, March has more days than February, and that juiced the numbers a bit, but the daily averages were also way up.
What this tells me is that the banks want to get these properties through the system and fast; they don’t want to wait for a settlement that will slow the process or force them to forgive principal on these troubled loans, which even with reduced balances will likely end up back in foreclosure anyway.
So while negotiations for a settlement of the foreclosure paperwork snafu drag on, the banks are turbocharging their foreclosure activity. Makes sense: Fewer defaulted borrowers on the books mean fewer loans that they can be forced to modify. This probably is a strategy that works best in the non-judicial foreclosure states.
The old banking adage that your first loss is your best loss, is once again proving its value. I suspect that there are quite a few bank executives who rue not having bitten the bullet early on, thus avoiding the mess they now find themselves amid.