Default surge will weaken the housing market

Media Reports News

Default surge will weaken the housing market

December 14, 2011 [Middletown Journal]

A rise in month-to-month foreclosure actions may herald more foreclosures in the new year.

RealtyTrac, which follows foreclosure case filings, counted 424 foreclosure actions for Butler County in November, up from October’s total of 395.

Butler County had 411 foreclosure actions in September, down from 425 in August.

“Despite a seasonal slowdown similar to what we’ve seen in each of the past four years, November’s numbers suggest a new set of incoming foreclosure waves, many of which may roll into the market as REOs or short sales sometime early next year,” James Saccacio, co-founder of RealtyTrac, said in a statement.

REOs are lender- or mortgage company-owned real estate parcels.

Across Ohio, they’re up 17.18 percent in November compared to the previous month. They’re down just 2.62 percent from November 2010.

Last month, foreclosure filings were up in Butler County less than 1 percent from the same time a year ago.

Michael Royce, a real estate agent who specializes in distressed properties, expects foreclosure actions to rise again after short lulls in the early autumn.

“The foreclosures I’m not running into much lately, but the word I’m hearing is that the banks have them in stock and are getting ready to release them,” Royce said.

He believes banks would rather accept a short sale — in which a lender accepts less for a property than is owned on it — than a foreclosure. He said banks can lose 25 to 50 percent of their investment in a property on a short sale, but 50 percent or more in a foreclosure.

Rising foreclosures will weaken an already weak housing market, Royce expects.

A rise in foreclosed homes isn’t good news for anyone, but homebuilders don’t necessarily feel that directly, said Walt Hibner, executive director of the Home Builders Association of Dayton. “We’re usually not competing with foreclosed homes,” Hibner said.

Butler County is considering forming a County Land Reutilization Corp., or a land bank, that can acquire vacant, abandoned and tax-foreclosed properties for rehabilitation and reuse to address the foreclosure problem.

The county treasurer and director of development, and economic development officials from throughout the county met Dec. 6 for more information about land banks from experts.

The number of foreclosure cased filed in Butler County have increased from 500 in 1999 to more than 3,000 foreclosures last year, according to the presentation by Jim Rokakis, head of the Thriving Communities Institute and the former treasurer of Cuyahoga County who started Ohio’s first land bank there.