The Coming Wave

I attended several courses on foreclosed homes this past Saturday. One of the instructors painted a disturbing picture of the next two years. He outlined numerous reasons why the number of foreclosed homes on the market fell sharply in 2009. The first time home buyer tax credit was one factor. Another was new legislation which extends the time period required to complete foreclosure proceedings. A process which took three to six months in 2008, now takes a year or more. I know there have been numerous governmental efforts to slow down the foreclosure process; but what surprised me was the instructor's claim that the legislation was implemented at the request of mortgage lenders. You see, the lenders have a right to foreclose on delinquent mortgages; but if they fail to foreclose in a timely manner, they risk losing that right. At present there are so many delinquent mortgages that lenders can't process them fast enough - they needed an extension to avoid the risk of failing to foreclose in a timely manner. But he says not to worry. Lenders are working feverishly to get caught up; and the avalanche of Option Arm mortgage resets over the next two years virtually guarantees a flood of new foreclosures in the future.