Get ready for some more Housing bottom calls!
Thanks to some interesting regulations passed recently by New York, California, and Massachusetts, there is now additional notice requirements that must be complied with prior to initiating foreclosure procedures.
Hence, we should expect to see the defaults and repossessions procedures that would have begun in August and September 2008 not show up in the data until wont show up until October and November 2008.
Here is a an excerpt from the WSJ:
"When the research firm RealtyTrac Inc. releases its latest foreclosure report Thursday, don’t be surprised if the number of filings declines again.
Last month, RealtyTrac reported that foreclosure filings totaled 252,363 in June, down 3% from the previous month. Some analysts are expecting the July data to show another decline or very little change.
If that happens, could the improvement be a sign that the foreclosure problem is ebbing? Probably not. The data may reflect several developments aimed at reducing foreclosures, including new state and municipal laws that put a temporary moratorium on foreclosures. Such laws are designed to give homeowners more time to work with their lenders and modify troubled loans.
Some cynics say the laws are designed to give the appearance that the housing crisis is easing ahead of the November elections."
Cynical, us? No, never!
What are the new legislative rules for foreclosure notices ?
• California requires lenders to wait an additional 30 days after a homeowner misses the first payment before filing a default notice;
• Massachusetts now gives homeowners a three-months grace period after they default on their mortgage before the lender can file to foreclose. (The law is credited with an 84% drop in foreclosure petitions);
• New York passed a bill last week that requires lenders to send a preforeclosure notice to certain borrowers at least 90 days before foreclosure proceedings may be initiated;
Of course, these notice requirements only delay the inevitable for the vast majority of foreclosures.
Expect more false bottom calls in the housing market of the next 90 days.
Bank Lending Practices Tighten as Loan Demand Falls (August 2008)
Slowing Foreclosures May Mask Breadth of Woes
WSJ, August 11, 2008; Page A2