The New York Times reports here that the foreclosure system is overwhelmed by the sheer number of houses waiting to be foreclosed upon. In states like New York the backlog would extend for 62 years at current rates of foreclosure. This, of course, is in states where foreclosure is a judicial action. In other states like California (and Arizona) where it is not a judicial action, that backlog is 3 years.
This certainly coincides with my experience as a bankruptcy attorney. As a firm we have had clients that have lived in their house waiting to get foreclosed upon for over five years. You read that right. Five Years. Of course, that’s an atypical case with most of our clients living in houses that they are surrendering for approximately a year. Further, bankruptcy further slows down the process of foreclosure as well. All of which gives homeowners much needed breathing room in this terrible economy.
As an aside, you may have recently heard that it is now what is termed a “seller’s market” in real estate. This mans that there is less than 3 months of inventory for sale currently. While technically true, I believe that this is not taking into account the stealth inventory that the banks have of houses that they are waiting to foreclose upon. You may ask why they are waiting, the primary reasons are that the banks do not want to own a house, risk the liability of injury, pay the HOA fees, or figure out a way to maintain the property. Finally, and primarily, I believe that the banks are waiting to foreclose because they know about the phenomenon of a seller’s market, which is supposed to increase house prices. In essence, they are trying to create a false market for the properties they need to sell, eventually. Just my 2 cents.
Thank you for taking the time to read this article by Tempe, Arizona Bankruptcy Lawyer Glenn Roethler. The views expressed in this article do not represent the views of all members of Greeves, Price & Roethler, PLC.