Here is a link to an article written by Richard Eskow for the Huffington Post:

http://www.huffingtonpost.com/rj-eskow/getting-medieval-on-your_b_775482.html

Regardless of what do you think of banks being forced to halt foreclosures because of “bad” paperwork  the end result will be that it will take a longer time to see stability in the real estate market.

 

According to DQNews.com California mortgage defaults rose in the third quarter. See article at

 

http://www.dqnews.com/Articles/2010/News/California/CA-Foreclosures/RRFor101026.aspx

 

Therefore this temporary slow-down will not stop foreclosures. The bottom line is that if borrowers do not pay back the loan they signed for, they will lose their property. Period. That will not change. So the question is “will this slow-down have a negative effect of real estate’s recovery”. My opinion is that it most definitely will exacerbate the already huge problem.

 

You must first understand what happens when a bank forecloses on a property. The banks are the most aggressive sellers in the market. By that I mean they will offer their properties at very reasonable prices, thereby setting lower comparable sales that appraisers will use to value your home. If you as a seller want to compete with the banks listings you’ll be very disappointed at the price at which you must list your home in order for it to sell.

 

Right now there are over 1,000 distressed properties in Marin (see chart below). Distressed properties fall into 3 categories: pre-foreclosure, auction and bank owner (REO).

 

Pre-foreclosure means that they owners have been given a Notice of Default by their lender. A lender generally sends out a Notice of Default after a borrower is late by 2 – 3 payments. The bank now has the right to foreclose after another 90 days if the loans is not brought current (paid up to date).

 

Auction means the lender has set a date to auction the property on the “steps of city hall”. If it doesn’t sell then, it becomes……

 

Bank owned. The property’s title has now been transferred to the lender and they own it out right.

 

Until the foreclosures stop because the loan crisis is over and until all of the foreclosed properties are put on the market and sold we will not have a stable market. After this crisis properties for sale will compete only with other sellers and not with bank properties. Then and only then will true market conditions regulate values, stabilization will occur and we will begin to make a move towards appreciation. That, by the look of our market at this moment, is still quite a ways off.

 

 

Town                                Pre-Foreclosures            Auction           Bank Owned (REO)

 

Belvedere                                4                                  2                                  2

 

Tiburon                                    10                                16                                18

 

Mill Valley                               28                                42                                39

 

Corte Madera                          12                                18                                7

 

Larkspur                                   4                                  13                                5

 

Greenbrae                                13                                7                                  5

 

Kentfield                                 1                                  3                                  6

 

Ross                                        1                                  3                                  0

 

San Rafael                               113                              132                              108

 

Novato                                    147                              179                              109

 

Fairfax                                     16                                9                                  11

 

San Anselmo                          16                                9                                  17