Here’s the bad news: The drop is mostly meaningless, because it doesn’t signal any real economic rebound, according to a report by RealtyTrac, a company that specializes in classified ads for foreclosed homes.
Rather, the decline is due mostly to the robo-signing scandal, which forced banks to slow their foreclosure processing, and because banks and courts are overwhelmed with the number of foreclosed homes they have already.
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“Unfortunately, the falloff in foreclosures is not based on a robust recovery in the housing market but on short-term interventions and delays that will extend the current housing market woes into 2012 and beyond,” James J. Saccacio, RealtyTrac’s CEO, said in a press release.
In other words, the foreclosure crisis is merely delayed, not over. Lenders foreclosed on 212,764 properties in July, a 4% decrease from the previous month and a 35% drop from July 2010, RealtyTrac reported. It was the 10th straight month of year-to-year decrease.
That’s still a lot of foreclosures. It would be a lot worse, Saccacio says, were it not for the fact that courts and lenders are overwhelmed by foreclosures already in the system, as well as programs by federal and state agencies to promote loan modifications, and mortgage payment assistance for the unemployed.
While efforts like improving the rate of mortgage modifications is seen by some as an effective way to reduce the foreclosure rate long-term, Saccacio has his doubts. Such programs “may be allowing more distressed homeowners to stave off foreclosure,” but they don’t necessarily prevent it forever, Saccacio said.
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Image: Casey Serin, via Flickr.com